ECONOMIC FREEDOM & HAPPINESS INEQUALITY: FRIENDS OR FOES?

Abstract

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. (JEL D63, I31, P16)

Historical Prevalence of Infectious Diseases, Cultural Values, and the Origins of Economic Institutions

“…Finally, we advance the literature methodologically by suggesting a potential new instrument that can be used to examine the effect of a wide range of cultural values (e.g., social trust, religiosity, ethnolinguistic fractionalization) on numerous economic, social, and political outcomes. This is important since many recent studies document a strong correlation between institutions and cultural values such as social trust (Berggren and Nilsson ), morality (James ), attitudes toward fertility and childbearing (Basso ) and outcomes such as control perceptions (Nikolaev and Bennett ) and even happiness inequality (Bennett and Nikolaev ), to mention a few.…”

The Impact of Economic Freedom on Creating Happiness and Inequality: International Evidences

“…Nikolaev and Bennett [13] examined the relationship between economic freedom on happiness and inequality including large sample countries and found that economic freedom is negatively associated with happiness and inequality. Bennett and Nikolaev [19] explored the estimation between emotional Well-Beings and economic freedom by using the data from 12 sample countries from wave 2 of the World Value Survey and Economic Freedom Index. They found that people who lived in more economically free societies are more likely to report the presence of a positive effect on happiness.…”

Is Economic Freedom the Hidden Path to Social Justice?

“…Meanwhile, Bennett and Nikolaev (2017) demonstrate that economic freedom reduces inequality of well-being using a robust set of inequality measures. This finding demonstrates that people actually report being happier under institutions of greater economic freedom and that the benefits of economic freedom on well-being aren't falling only on those in the upper ranks of the happiness distribution.…”

“…However, they find that monetary reforms, legal reforms, and political globalization do not increase inequality. Bennett and Nikolaev (2017) examine six different measures of income inequality with up to 112 countries from 1970 to 2010. By studying the Standardized World Income Inequality Database, they are able to account for the uncertainty of the estimated Gini coefficients.…”