This chapter reviews the empirical literature on the relationship between economic freedom and subjective well-being. It also suggests some methodological problems with examining this relationship empirically. Evidence is presented that suggests that people who live in countries with institutions consistent with the principles of economic freedom report higher levels of subjective well-being. Economic freedom tends to benefit not only the top 20 percent of income earners but even more so those at the bottom of the income spectrum. The effect of economic freedom also tends to be much stronger in less developed countries. Decomposing the EFW index into its five areas further shows that what matters to subjective well-being is not the size of the government but the quality of the institutions that define the legal system and establish rules for the protection of private property, sound monetary policy, and friendly business environment.
Christopher J. Boudreaux and Boris Nikolaev
This chapter examines how the regulatory environment affects the relationship between gender and entrepreneurs’ early-stage growth aspirations. To do this, the authors develop a multi-level model that connects feminist theory at the micro-level to institutional theory at the macro-level. It is hypothesized that gender differences in early-stage entrepreneurship are more pronounced in low-quality regulatory environments and less pronounced in high-quality regulatory environments. Using data from the Global Entrepreneurship Monitor (GEM) and regulation data from the Economic Freedom of the World Index (EFW), the authors test their predictions and find evidence in support of their model for credit market regulations but not for business or labor market regulations. These findings suggest that, while there are gender differences in entrepreneurs’ early-stage growth aspirations, these disparities are reduced as the credit market regulatory environment improves.