Happiness, economic freedom and culture

Abstract

The cultural dimension of the subjective well-being (SWB)–economic freedom relationship has been largely absent from the current literature. This article’s argument for the inclusion of culture is twofold. First, culturally distinct groups may view the desirability of freedom in general and economic freedom in particular differently. Second, the inclusion of culture may explain some of the results presented in the existing research, such as positive contributions of freedom to SWB being confined to mostly developed countries. In this article, the respondent-based results use the World Values Survey (WVS) data with over 180 000 subjects in 86 countries and indicate that freedom of choice felt by individuals is an important determinant of SWB along with health and satisfaction with finances. While the respondent-based estimations do not show any variation in the effect of freedom of choice on SWB among different religious affiliations, the cross-section data-set that contains the same countries as in the WVS data yields different results. When the latter data-set is used, the interaction terms between economic freedom and religious affiliations indicate that higher economic freedom increases SWB in mainly Christian countries, while this effect is negative for mainly Muslim and Buddhist/Hindu countries.

Keywords:

• happiness
• subjective well-being
• economic freedom
• culture

JEL Classification:

• A13
• P51