Explaining Happiness Trends in Europe

Richard Easterlin and Kelsey O'Connor

No 15904, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In Europe differences among countries in the overall change in happiness since the early 1980s have been due chiefly to the generosity of welfare state programs— increasing happiness going with increasing generosity and declining happiness with declining generosity. This is the principal conclusion from a time series study of ten Northern, Western, and Southern European countries with the requisite data. In the present study cross-section analysis of recent data gives a misleading impression that economic growth, social capital, and / or quality of the environment are driving happiness trends, but in the long-term time-series data these variables have no relation to happiness. Significance: Over the past five decades happiness has emerged as a subject of social science research and a potential goal of public policy. But how can a country's happiness be increased? On this, there is a conflict between a number of policy alternatives – promote economic growth, increase social capital, improve the environment, expand welfare state programs. Each of these has point-of-time (cross-section) evidence supporting its claim, but there are very few long-term time-series studies. This article presents newly available time-series evidence that supports the importance of welfare state policies.

Keywords: quality of environment; trust; social capital; welfare programs; long-term; subjective well-being; life satisfaction; happiness; economic growth; cross section; time series; Europe; Easterlin Paradox (search for similar items in EconPapers)
JEL-codes: D60 I31 I38 O10 Q53 Z13 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2023-01
New Economics Papers: this item is included in nep-eec, nep-hap and nep-ltv
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Published - published in: Proceedings of the National Academy of Sciences , 2022, 119 (37), e2210639119.

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