Sometimes Your Best Just Ain't Good Enough: The Worldwide Evidence on Well-Being Efficiency

64 Pages Posted: 5 Jun 2017

See all articles by Milena Nikolova

Milena Nikolova

IZA

Olga Popova

Leibniz Institute for East and Southeast European Studies (IOS); Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute); Graduate School of Economics and Management, Ural Federal University

Abstract

Despite the burgeoning happiness economics literature, scholars have largely ignored explorations of how individuals or countries translate given resources into well-being. Using a balanced panel on 91 countries from Gallup Analytics between 2009–2014 and borrowing insights from production theory, we investigate whether nations in our sample efficiently convert their current resources (i.e. income, education and health) into subjective well-being. Our results imply that well-being efficiency gains are possible worldwide. We find that unemployment and involuntary part-time employment are associated with lower efficiency, while good institutions as proxied by the rule of law, as well as social support and freedom perceptions improve it. Within-country investigations for Bulgaria – an upper-middle-income country that often lurks at the bottom of the international well-being rankings – demonstrate that efficiency is lower among the unemployed, divorced/separated, widowed, the old, large households and those with children, while living in a city, freedom, generosity and social support improve efficiency. This paper provides the first evidence from an international panel concerning the issue of whether higher well-being levels are possible with current resources and raises policy-relevant questions about the appropriate instruments to improve well-being efficiency.

Keywords: happiness, subjective well-being, efficiency analysis, conversion efficiency, comparative analysis

JEL Classification: D60, I31, O15, P52

Suggested Citation

Nikolova, Milena and Popova, Olga, Sometimes Your Best Just Ain't Good Enough: The Worldwide Evidence on Well-Being Efficiency. IZA Discussion Paper No. 10774. Available at SSRN: https://ssrn.com/abstract=2979920

Olga Popova

Leibniz Institute for East and Southeast European Studies (IOS) ( email )

Landshuter Str. 4
Regensburg, 93047
Germany

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

Graduate School of Economics and Management, Ural Federal University ( email )

Yekaterinburg
Russia

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