Abstract
The effect of the size of the welfare state on the average happiness level in a nation has often been discussed—but the same effect on happiness inequality has been explored much less. Rooted in divergent philosophical disciplines, utilitarianism and egalitarianism respectively, scholars have discussed the merits of policies as they effect each of these two criteria for justice. John Rawls’ difference principle, on the other hand, philosophically justifies a limited trade-off, increasing happiness inequality to benefit the over-all happiness level of the least advantaged. The difference principle—that society should allow inequality insofar as it is to the greatest benefit of the least advantaged—has seldom been discussed empirically in the context of the happiness literature. This paper contributes to the ongoing literature evaluating the welfare state in light of happiness indicators by introducing the difference principle and asking whether the welfare state benefits the least advantaged in society. My empirical analysis shows that self-reported life satisfaction of the least advantaged does not improve from an increase in the size of the welfare state more than the self-reported life satisfaction of the average citizen. In short, the welfare state does not benefit the worst-off in a society in terms of happiness more than the average member.
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Notes
There is debate over what Rawls exactly had in mind when considering social primary goods—whether it be access to resources, utility, or capability (Freeman 2002). I do not intend to address this literature here, but rather use happiness as an indicator of social primary goods, which very well applies to most of these perspectives.
As defined in Appendix A of Veenhoven (2005), in which:
$$ IAH=100-\frac{100}{(1+0.414/\left(\frac{\rm mean}{\rm std.}\right))} $$Based on the same motivation, these three measures are used in Pacek and Radcliff (2008).
It is plausible that when a negative shock in the economy increases the level of unemployment, the size of the Welfare State may increase in response. If the analysis did not control for the level of unemployment the change in happiness that came from the shift in the economy would be attributed to the change in the size of the Welfare State. On the contrary, it is plausible that the size of the Welfare State may affect unemployment levels, and as such affects happiness through unemployment. My estimates would be biased as a result. Removing unemployment from the analysis does not significantly change the results (all coefficients are of the same significants at a similar magnitude), I discuss this limitation in greater detail in the conclusion.
For example, average happiness is on a scale between 0 and 10 with an observed minimum of 3.72 and maximum of 8.49. But IAH is on a scale 0 to 100 and has an observed minimum of 33.20 and maximum 70.95.
For decommodification there are 3.5 standard deviations between the minimum and maximum values, for social wage there are 4.4 standard deviations, and for left-party score there are 4.3 standard deviations. This means if the “least” Welfare State became the “highest,” the increase in each measure of happiness would not be more than 12 %.
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Gainer, M. Assessing Happiness Inequality in the Welfare State: Self-Reported Happiness and the Rawlsian Difference Principle. Soc Indic Res 114, 453–464 (2013). https://doi.org/10.1007/s11205-012-0155-0
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DOI: https://doi.org/10.1007/s11205-012-0155-0