Abstract
The market and the welfare state are the institutions widely agreed to be the main alternatives available for generating and distributing human well-being. Contending arguments make powerful claims for the superiority of each, reflecting as they do the basic ideological division shaping political conflict in capitalist democracies. In this chapter we attempt an empirical appraisal of this issue, using the extent to which individuals find their lives to be satisfying as an evaluative metric. Considering rates of life satisfaction in the advanced industrial democracies, we find that satisfaction increases as the level of state intervention in the market economy increases. The data suggest that maximizing the “decommodification” provided by the welfare state does indeed help to maximize human happiness. We conclude with a discussion of the practical and theoretical ramifications of these findings.
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Notes
- 1.
The intellectual infrastructure for studying subjective well-being is sufficiently developed and familiar so as not to require extensive elaboration. A voluminous literature has documented that conventional survey items utilized to measure subjective well-being are reliable and valid (for a discussion, see Myers and Diener 1995). After an exhaustive review, Veenhoven concludes that any misgivings about measurement “can be discarded” (Veenhoven 1996, p. 4). Similarly, the collective evidence strongly endorses the proposition that linguistic or cultural barriers (including social pressures for over—or under-reporting self reported satisfaction) do not meaningfully detract from our ability to make cross-national comparison (see, for example, Inglehart 1990 and Veenhoven 1996, 1997a, b). More recent literature equally supports this position. Kacapyr (2008), for instance, argues that subjective well-being indicators do warrant the confidence that the research has placed on them. Another literature, again conveniently summarized by Veenhoven (2002), convincingly argues for the theoretical appropriateness of subjective measures of quality of life, such as satisfaction, as opposed to purely objective indicators (such as income or other measures of consumption).
- 2.
Countries in our study include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Japan, The Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and The United States.
- 3.
DiTella et al. (1997) referred to the residual method, when applied to nation states, as providing an estimate of a country’s “pure” level of satisfaction, meaning the amount of satisfaction that can be attributed to national characteristics per se. Radcliff (2001), who uses the same method, notes that this may overstate the case somewhat, since politics can influence at least some variables (e.g., income) that are potentially affected to at least some degree by government policy. Still, the procedure is useful because it is highly conservative, given that it assigns as much variance as possible to individual-level factors that are assumed to be apolitical, thus “raising the bar for showing that politics indeed affects average levels of satisfaction” (Radcliff 2001). This approach is familiar to students of American politics in the work of Erikson et al. (1993), who utilize the same logic to estimate states’ ideological cultures, i.e. they regress individual ideological orientations on demographic variables, and then include dummies for states, which in turn become their estimates of culture in the sense of being that variance not explained by individual-level variables. We use mean residuals (Radcliff 2001) instead of the value of the dummy variables, but the procedures are econometrically equivalent.
- 4.
Details in the coding can be found in Appendix 1: Explanatory Notes and Data Sources, pp. 192–193 in the 2008 Economic Freedom of the World Report (http://www.freetheworld.com/2008/EFW2008App1.pdf).
- 5.
The details of the rigorous operationalization are not readily summarized. Perhaps the most succinct description is offered by Messner and Rosenfeld (1997, p. 1399): the index “encompasses three primary dimensions of the underlying concept: the ease of access to welfare benefits, their income-replacement values, and the expansiveness of coverage across different statuses and circumstances. A complex scoring system is used to assess (the amount of decommodification provided by) the three most important social welfare programs: pensions, sickness benefits, and unemployment compensation. The scoring system reflects the ‘prohibitiveness’ of conditions for eligibility (e.g., means testing), the distinctiveness for and duration of entitlements (e.g., maximum duration of benefits), and the degree to which benefits replace normal levels of earnings. The indices for these three types of…programs are then aggregated into a combined (additive) index.” It should be noted that the individual indices are weighted by the percent of the relevant population covered by the given programs. Each dimensional index is built from multiple indicators (e.g., five for old age pensions, four each for sickness and unemployment) reflecting the concerns noted above. The data can be located at http://sp.uconn.edu/~scruggs/wp.htm (accessed on April 15 2008).
- 6.
The Polity data set examines concomitant qualities of democracy and autocracy in governing institutions and spans a range of fully institutionalized autocracies through “mixed” or “incoherent authority” regimes, to fully institutionalized democracies. The Polity score captures this regime authority spectrum on a 21 point scale ranging from −10 (hereditary monarchy) to +10 (consolidated democracy). Full details may be found at the Polity data set website (http://www.systemicpeace.org/polity/polity4.htm).
- 7.
Unemployment data are from the World Development Indicators 2006 edition CD-ROM, from the World Bank. (For more information, see: http://publications.worldbank.org/ecommerce/catalog/product?item_id=5612167).
- 8.
Note again that this is the only case suggested by the diagnostic. Other conventional regression diagnostics suggest nothing untoward.
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Davidson, R., Pacek, A.C., Radcliff, B. (2013). Public Policy and Human Happiness: The Welfare State and the Market as Agents of Well-Being. In: Brockmann, H., Delhey, J. (eds) Human Happiness and the Pursuit of Maximization. Happiness Studies Book Series. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-6609-9_12
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