Happiness, freedom and control

Abstract

Abstract:How do people value freedom of choice? Drawing on economics and psychology the paper provides an hypothesis and empirical evidence on how individuals may value freedom of choice and derive utility from it. It is argued that the degree of perceived control that individuals have over choice -a construct known as the locus of control in psychology -regulates how we value freedom of choice. People who believe that the outcome of their actions depends on internal factors such as effort and skills (the 'internals') have a greater appreciation of freedom of choice than people who believe that the outcome of their actions depends on external factors such as fate or destiny (the 'externals'). We find some evidence in support of this hypothesis using a combination of all rounds of the World and European Values Surveys. A variable that measures freedom of choice and the locus of control is found to predict life satisfaction better than any other known factor such as health, employment, income, marriage or religion, across countries and within countries.We show that this variable is not a proxy of happiness and measures well both freedom of choice and the locus of control. 'Internals' are found to appreciate freedom of choice more than 'externals' and to be happier. These findings have important implications for individual utility, social welfare and public policies.

Who Benefits from Economic Freedom? Unraveling the Effect of Economic Freedom on Subjective Well-Being

“…In addition, a lack of established property rights prevents Coasian solutions to problems like externalities, and is often cited as a reason for the "tragedy of the commons" (Hardin 1968). Legal security and the right to enforce one's rights should also contribute to a "feeling of freedom & control" (Verme 2009), especially increasing perceived control. Norton (1998) stated that the Fraser Institute measures "are the most comprehensive and the most subtle" for assessing legal security and property rights.…”

“…In the psychological literature, have found that a feeling of freedom is strongly related to higher SWB, and Verme (2009) suggested that self-perceived freedom and control are the strongest predictors of SWB. A number of studies have found a positive effect of decentralization ), a lower share of government spending as a percentage of GDP (Bjørnskov et al 2007), and the quality of institutions (Bjørnskov et al 2010).…”

Institutional Origins of Subjective Well-Being: Estimating the Effects of Economic Freedom on National Happiness

“…For example, in transition countries unhappiness was a consequence of the fact that individuals were not able to mold their own future and the subjective well-being thus depended on a robust level of freedom. On the other hand, transition countries in many respects have continued to score low on happiness due to depreciation of human capital, deteriorating public goods and rising income inequality (Guriev and Zhuravskaya 2009;Verme 2009). …”

Reforming Welfare States

“…Belief in oneself, or more generally, behavioural traits, are determined by a knotty mix of factors formed mainly in childhood, which are both genetically and socially transmitted, partially transferable between parents and children (Verme, 2009). The authors conclude that, in order to affect Welfare States' demand, a meaningful strategy could be to focus on education systems and (complementarily) on social policy in a long term perspective.…”

“…Belief in oneself, or more generally, most behavioral traits, are determined by a knotty mix of factors being formed mainly in childhood, which are in part genetically and socially transmitted, partially transferable between parents and children and so on (Verme, 2009). Therefore, informal institutions can hardly be changed by operating public policies.…”