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Institutions and Life Satisfaction

Living reference work entry

Abstract

The degree to which people are satisfied with their lives is affected by many factors. This chapter surveys studies that document the influence of one such factor – formal institutions (i.e., written rules). Such rules, typically laws that enable and constrain political, legal, and economic decision-making, have the potential to affect how satisfied people are with their lives in at least two ways. First, there can be direct effects in that rules either enable certain individual choices or constitute constraints on the individual’s choice set; furthermore, such effects can be of a “symbolic” kind: certain types of rules are valued for their character. Second, there can be indirect effects in that rules shape the overall character of society, through the actions that are, and that are not, taken by people. This character – in the form of various outcomes of the rules that function as mediators – can influence individual life satisfaction within a society. The present review of the literature identifies empirical studies that link formal political, legal, and economic institutions to subjective well-being – primarily in the form of life satisfaction, but in some cases in the form of happiness. Some main results can be summarized as follows: Political institutions are related to life satisfaction through democracy and direct democracy; legal institutions seem able to boost life satisfaction by being effective, fair, and inclusive; and economic institutions that strengthen the role of markets in society are positively related to life satisfaction (as are some “complementary” regulations of employment and welfare-state policies). In all, it is demonstrated that the incorporation of formal institutions into studies of life satisfaction is essential, and that careful design, or reforms, of institutions has the potential to increase – or decrease – life satisfaction in society.

Notes

Acknowledgments

Financial support from Jan Wallanders and Tom Hedelius stiftelse (grants P18-0162, P19-0180), Johan och Jakob Söderbergs stiftelse (grants 47/19, FA20-0001) and the Czech Science Foundation (GA ČR) (grant 19-03102S) is gratefully acknowledged.

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Authors and Affiliations

  1. 1.Research Institute of Industrial Economics (IFN)StockholmSweden
  2. 2.Department of Economics (KEKE NF)University of Economics in PraguePrague 3Czechia
  3. 3.Department of EconomicsAarhus UniversityAarhus VDenmark

Section editors and affiliations

  • Milena Nikolova

There are no affiliations available

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