Government spending and happiness of the population: additional evidence from large cross-country samples

This study uses large cross-country samples and several measures of happiness, income, and government spending to revisit the relation between government spending and the population’s happiness. The main finding is that increased government spending does not lower happiness in broad cross-country contexts. Much caution is, therefore, urged in interpreting the negative association between government spending and happiness reported in some earlier studies and the suggested policy implications. Three additional points are noted. First, the weight of the evidence suggests a significant positive association between income and happiness. Second, estimates based on income and government-share data from Penn World Table and the new International Comparison Program show similar patterns. Third, the parameter for generalized trust seems fragile.