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Abstract:

Political Economy and Public Policy Paper
Cross-Country Determinants of Life Satisfaction: Exploring Different Determinants across Groups in Society
Christian Bjørnskov, Axel Dreher and Justina A. V. Fischer September 2006
Paper No' PEPP 21:
Full Paper (pdf)

JEL Classification: I31; H10; H40


Tags: life satisfaction; happiness; institutions; extreme bounds analysis

This paper explores a wide range of cross-country determinants of life satisfaction exploiting a database of 90,000 observations in 70 countries. We distinguish four groups of aggregate variables as potential determinants of satisfaction: political, economic, institutional, and human development and culture. We use ordered probit to investigate the importance of these variables on individual life satisfaction and test the robustness of our results with Extreme Bounds Analysis. The results show that only a small number of factors, such as openness, business climate, postcommunism, the number of chambers in parliament, Christian majority, and infant mortality robustly influence life satisfaction across countries while the importance of many variables suggested in the previous literature is not confirmed. This remains largely true when the analysis splits national populations according to gender, income and political orientation also.