Does economic freedom lower happiness inequality?

There should be a whole category of “results that aren’t true as stated but are interesting nonetheless.”  Here is a new paper by Daniel L. Bennett and Boris Nikolaev:

This article examines the relationship between economic freedom and happiness inequality for a large sample of countries. We find that economic freedom is negatively associated with happiness inequality and robust to several alternative measures of happiness inequality, including the standard deviation, mean absolute difference, coefficient of variation, and Gini coefficient. Among the economic freedom areas, legal system and sound money are negatively correlated with happiness inequality. Drawing on the Engerman-Sokoloff hypothesis, we use a measure of factor endowments as an instrument for economic freedom to provide a further robustness test, finding a negative association between economic freedom and happiness inequality.

Two points.  First, the influence of economic freedom often diminishes once you control for the quality of government in a particular locale.  This is perhaps more of an “all good things go together” result than any particular causal story.  Second, many of these results are mediated by the “hard money” component of economic freedom.  But hard money is not economic freedom per se, but rather it may be proxying for some successful cultural attitudes.

For the pointer I thank the excellent Kevin Lewis.  Also via Kevin, here is another published result you shouldn’t quite believe as stated: “…the combination of feeling tired and happy may enhance acceptance of atypical or unusual ideas, which could potentially help creative thought.”


Comments for this post are closed