Marcus Samanni and Sören Holmberg The hypothesis in this chapter may seem a little strange, especially to neo-liberal economists. We shall test whether government could be part of the solution and not part of the problem, as is so often the case in some economic theories. Our hypothesis is that quality of government (QoG) – defined as effectiveness, impartiality, rule of law and no corruption – is a factor, a prerequisite, behind aggregate levels of feelings of happiness and satisfaction with life among populations across the world. QoG makes people happy. And it makes people happy in rich countries as well as in poor countries. Maybe not “big government”, but certainly “good government”, is an essential recipe for making citizens more content with their lives. That is our strange hypothesis. EARLIER RESEARCH Earlier research clearly indicates that, on a general level, QoG has a positive effect on happiness. The more effective, incorrupt and impartial government institutions are, the happier and the more satisfied with their lives are citizens (Bjørnskov et al. 2008; Helliwell and Huang 2008; Ott 2011). A debate in the literature is whether there is an interaction of QoG with economic development. It is sometimes argued that QoG has an effect only in poor countries. In models with only richer countries the QoG variable often, but not always, fails to reach significance. Helliwell and Huang (2008) analyze a total of 75 countries and find that QoG has a significant and positive effect on subjective well-being. However, when dividing...
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