Individual Perceptions toward Social Systems, Social Spending and Subjective Well-Being in Europe

Abstract

It can be commonly assumed that the larger welfare states, measured by the share of government expenditure on social affairs over GDP, make individual happier, measured by life satisfaction indicator, however, it is not true in relative studies (Veenhoven, 2000; Ouwenneel, P., 2002; Ono, H. & K. S. Lee, 2013). On the other hand, Edlund & Lindh (2013) shows that individual trust in public institutions and in market institutions affect welfare state support in Sweden. Using multidimensional measurements of individual perception toward public institution (Bleksaune & Quadagno, 2003; Larsen, 2008; Edlund & Lindh, 2013; Roosma, Gelissen & Oorschot, 2013), this study aims to fill the gap of the effect of welfare states on subjective well-being. Since that different historical and cultural contexts across European countries and the U.S. cause different interpretation of inequality and happiness(Alesina, Di Tella & MacCulloch, 2004), cultural context should be considered when choosing the target of study. In this line, focusing on European countries, European Social Survey (2002-2014), Eurostat, and World Development Indicators of the World Bank are the main data sources of individual variables, including life satisfaction, government expenditure and national characteristics, respectively. In results, while the relationship between social spending and subjective well-being is not significant or even negative, positive perceptions toward public institutions mediate the effect of the welfare states, making the coefficient positive, significant and robust. The results imply that not only the size and structure of social policies but also political support are crucial for happier people in the welfare states.