Well-being, Political Decentralisation and Governance Quality in Europe

Abstract

European nations allocate public sector resources with the general aim of increasing the well-being and welfare of their citizens through a fair and efficient distribution of these public goods and services. However, “who” delivers these goods and services and “how well” they are delivered are essential in determining outcomes in terms of well-being. Drawing on data from the European Social Survey database, this paper uses Amartya Sen’s social welfare index framework—accounting for the trade-off between the maximization of public sector resources and an equitable distribution of these resources—to examine the influence of political decentralisation (“who” delivers the resources) and whether this influence is moderated by governance quality (“how well” they are delivered) on individual subjective well-being. The findings of the econometric analysis reveal that decentralisation does not always lead to higher well-being, as the benefits of political decentralisation are highly mediated by the quality of national governance. In countries with high governance quality, political decentralisation results in a greater satisfaction with health provision, while in lower quality governance countries, a more decentralized government can increase the overall satisfaction with life, the economy, government, democracy and the provision of education, but not necessarily with health-related services.

Keywords:

• Well-being
• Political decentralisation
• Quality of governance
• Europe
• European Social Survey

JEL Classification:

• I31
• H70
• H11

Disclosure Statement

No potential conflict of interest was reported by the authors.

Supplemental Data

Supplemental data for this article can be accessed http://dx.doi.org/10.1080/19452829.2018.1563773.

About the Authors

Andrés Rodríguez-Pose is a professor of Economic Geography at the London School of Economics and a past-president of the Regional Science Association International. He has a long track record of research in regional growth and inequality, fiscal and political decentralization, institutions, regional innovation, migration, and development policies and strategies.

Vassilis Tselios is an Associate Professor of Regional Economics at the Department of Planning and Regional Development of the University of Thessaly and, currently, a Fulbright Visiting Scholar at the University of Chicago Harris School of Public Policy. His research centres around the spatial analysis of socioeconomic phenomena with a special emphasis on regional economic development and growth, regional policy, fiscal and political decentralisation, inequalities, education, social welfare and the welfare state.

ORCID

Andrés Rodríguez-Pose http://orcid.org/0000-0002-8041-0856

Vassilis Tselios http://orcid.org/0000-0001-6330-7278

Notes

1 Resorting to Sen’s social welfare conceptual framework using subjective measures can have significant advantages, but is also not devoid of problems. Sen himself does not favour a subjective appraisal of well-being. That represents a problem for the adaptation of his framework. However, a subjective approach can complement information extracted using an objective one and add greater nuance. This may compensate for the fact that often subjective indicators do not necessarily replicate exactly objective ones. But neither objective nor subjective capability analyses can always adequately capture all the dimensions that shape individual well-being. Hence, “a list of central human capabilities […] can be seen as an entry point for ‘asking the questions’ rather than ‘giving the answers’” (Comim 2008, 153), when it comes to exploring subjective well-being.

2 The use of subjective indices to measure subjective welfare has advantages, but also faces the risks that responses may vary depending on the understanding or interpretation of individual participants of the specific questions on which the survey is based.

3 For a review of the capabilities indicators see the work by Anand et al. (2009).

4 The 2010 Human Development Report introduced an inequality-adjusted HDI.

5 We would like to thank an associate editor for this point.

6 The inclusion of these dimensions has been considered taking into account the multidimensional nature of capabilities and functionings as well as data availability in the ESS database (European Social Survey Round 7 Data 2014) (see Section 3.1).

7 http://www1.worldbank.org/publicsector/decentralization/political.htm.

8 Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Kosovo, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine and United Kingdom.

9 In this case inequality comparisons with categorical data can be made, as all answers range from 0 to 10. Cowel and Flachaire (2012) address the problem of how to interpret a distribution of inequality measured as ordinal data as categorical variables.

10 The PWT version 9.0 is a database with information on relative levels of income, output, inputs and productivity, covering 182 countries between 1950 and 2014.

11 The difference between tfp and welfare-relevant tfp is that tfp is based on relative real GDP from the output side, while welfare-relevant tfp is based on relative real domestic absorption (Basu et al. 2012). Thus welfare-relevant tfp is constructed with prices and quantities as perceived by consumers, not firms (Basu et al. 2012).

12 The regression results weighted by population of each country and by the population size of the ESS survey are omitted because of space constraints and can be provided upon authors’ request.