Empirical Linkages between Good Governance and National Well-being, Journal of Comparative Economics

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Highlights

• Annual subjective life evaluations from 157 countries 2005–2012 demonstrate strong empirical linkages between government quality and national happiness.
• Changes in governance quality within a policy-relevant time horizon have led to significant changes in national happiness.
• Service delivery quality generally dominates democratic quality in supporting higher national happiness.
• Democratic quality shows a positive influence only among countries that have achieved sufficiently high quality of service delivery.

Abstract

This paper brings together the largest available sets of national-level data, covering 157 countries over the years 2005–2012, to assess the extent to which governance quality contributes to life evaluations. Our most significant new finding is that changes in governance quality within a policy-relevant time horizon can lead to significant changes in the quality of life. For example, the ten most-improved countries, in terms of changes in government service delivery quality between 2005 and 2012, when compared to the ten most-worsened countries, are estimated to have average life evaluations higher by 0.4 points on a 0 to 10 scale. The results also confirm earlier findings that service delivery quality generally dominates democratic quality in supporting better lives until delivery quality has reached sufficient levels. The situation changes as development proceeds, with democratic quality showing a positive influence among countries that have already achieved higher quality of service delivery.