Happiness and the role of social protection: how types of social spending affected individuals' life satisfaction in OECD countries, 1980-2012

Abstract

The growing literature on individual determinants of subjective well-being has given little attention to political factors. This paper considers the welfare state, and how social expenditure affects individuals’ self-reported life satisfaction. The statistical analysis uses indicators of subjective well-being, reflecting individuals from OECD-countries between 1980 and 2012, with data gathered from the Eurobarometer and the World Values Survey - which are analysed in comparison. The results suggest that social spending should be studied in terms of underlying branches when addressing its implications. The results find social spending to be uncorrelated with levels of subjective well-being when considered in terms of total levels. When considered as types of spending however, a majority of the elements are found to have significant impacts. The findings show mixed results among the two data sets; however, important similarities are found in the way social spending related to health care and poverty are having positive impacts, and spending associated with unemployment and labour market programmes have negative impacts. As the correlations of the underlying elements affect life satisfaction in different directions, total social spending appears to be uncorrelated with subjective well-being, although the true impact depends on which socialpolicies are being promoted through such spending.