The company you keep: Satisfaction with life,economic freedom,and preference-policy mismatch |
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| Institution: | 1. School of Business, University at Albany, State University of New York, Albany, NY 12222, United States of America;2. Department of Economics and Finance, UNCW Cameron School of Business, University of North Carolina Wilmington, Wilmington, NC 28403, United States of America;1. European Bank for Reconstruction and Development London, United Kingdom;2. Centre for Economic Policy Research (CEPR), London EC1V 0DX, United Kingdom;1. Ph.D. Fellow of the Research Foundation - Flanders (FWO);2. Research Centre for Regional Economics (VIVES), KU Leuven - University of Leuven, Belgium;1. University of Bayreuth, Germany and CREMA – Center for Research in Economics, Management, and the Arts, Switzerland;2. Indiana University, USA;3. Federal Department of Economic Affairs, Education and Research, Agroscope, Switzerland and CREMA – Center for Research in Economics, Management, and the Arts, Switzerland;1. University of Marburg, Public Economics Group, Am Plan 2, 35037 Marburg, Germany. CESifo, Munich, Germany. EconomiX, Paris, France;2. University of Marburg, Public Economics Group, Am Plan 2, 35037 Marburg, Germany;3. ifo Institute for Economic Research, Poschingerstr. 5, 81679 Munich, Germany. University of Munich, Germany. CESifo, Munich, Germany;1. University of Siegen, 57068 Siegen, Germany;2. CESifo, Germany;3. Technical University of Darmstadt, 64283 Darmstadt, Germany |
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| Abstract: | We examine the interaction between individual preferences for markets and state-level economic freedom as it relates to Satisfaction with Life (SWL). Fundamental tenets of economic freedom assert that societies free of excessive government involvement are wealthier and, ultimately, happier; individuals who are allowed to pursue self-interest are argued to be more motivated and more productive, and so society as a whole is better off. Though there is substantial empirical evidence that freer societies are wealthier, the evidence connecting economic freedom and happiness is less clear. We explore the relationship between economic freedom and SWL at the individual level. We examine differences between personal preferences for free markets and state policy and how this ‘preference-policy mismatch’ is related to SWL. We then briefly examine the relationship between preference-policy mismatches and individual self-reported voting behavior, including implications for Tiebout sorting. This study is the first to focus on individual economic ideology, i.e. individual level of support for free markets, and SWL in the United States. Combining individual and state level data we offer improvements to prior studies in a number of areas including an enhanced measure of life satisfaction, a richer basis for examining left-right differences than simple political identification, and an examination of the effect of preference-policy mismatches on satisfaction with life. We find significant relationships between SWL and individual support for markets, state-level economic freedom, and preference-policy mismatch. Further, preference-policy mismatch is positively associated with self-reported voting frequency. We find little support for Tiebout sorting. |
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