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Big government (done well) produces happier citizens, new study discovers

smiling people sit at dinner table with wine and food

Pundits who throw around the words “big government” usually point out the negatives of having too much government involvement in the economy, but a Texas A&M University researcher co-wrote a study that found government intervention – when done correctly – leads to more happiness and satisfaction in the lives of citizens.

In their study “Assessing the Impact of the Size and Scope of Government on Human Well-Being,” professors of political science Alexander Pacek at Texas A&M, Patrick Flavin of Baylor University and Benjamin Radcliff, University of Notre Dame, studied 21 developed nations – free market, capitalist democracies including the U.S. – from 1981-2007, examining data from nearly 50,000 respondents collected by the World Values Survey.

The researchers report that citizens of these countries find life more satisfying as the degree of government intervention in the economy increases. And the findings don’t change based on income, meaning that high- and low-income citizens find more “leftist” socioeconomic policies equally conducive to a more satisfying life.

Citizens of Denmark report the highest level of life satisfaction, followed by Switzerland, Iceland, Ireland and Austria. The U.S. ranks at No. 11 and last place belongs to Japan.

“We frame an argument that for all the blessings of free market capitalism and democracy, there are negative side effects such as market downturns, inequality and poverty, and these can create insecurities in citizens,” explains Pacek, an expert in how political determinants affect life satisfaction and happiness. “Our argument suggests that government intervention, done correctly, can improve life satisfaction by smoothing out these kinds of negative effects and consequences.”

The researchers looked at four measures of government policies: spending on social welfare programs; size of government, i.e. how large or small the public sector is; welfare generosity (for example, ease of access to benefits); and labor market regulation, i.e. workplace protections.

The country with the highest level of satisfaction was Denmark, followed by Switzerland, Iceland, Ireland and Austria rounding out the top five. The U.S. ranked No. 11; other countries lower on the satisfaction scale include Great Britain, Germany, Spain, France and, in last place, Japan.

Pacek says the kinds of social programs that lead to greater life satisfaction are high-quality programs that everyone has access to. “It’s not without its problems, but social security would be an example of a high-quality program,” he asserts.

In highly satisfied countries like Denmark, Pacek says, there is not a social stigma attached to government benefits like some people try to attach to them in the U.S. “In many of these countries, they receive the ‘social wage,’ a type of welfare benefit created around the notion that you have certain rights as a citizen, and one is to live with dignity and freedom from want. And the people who receive this are not given the sense that they are parasites. The eligibility requirements are broader, so everyone has the chance, if they need it, to receive this benefit.”

Pacek acknowledges there are the wrong kinds of government intervention, such as in non-democracies, where big government is oppressive.

And, he adds, the findings represent only the effects of government intervention on happiness and life satisfaction. “We don’t claim to address many of the other arguments on big government such as its effect on economic growth,” he says. “We leave that to the economists.”

The effects of “big government” are often debated by conservatives lamenting the hazards of too much government intervention, saying it causes inefficiency and damages the free market system, versus those on the left who argue for more intervention to ensure laws are being followed and to smooth out the negative consequences of market fluctuations.

“Ronald Reagan said ‘Government is not a solution to our problem, government is the problem,’” Pacek notes. “But that is short-sighted, in my opinion. Of course government can cause problems, but to those people who say government is always bad, always wrong, here we have evidence that is simply not the case.”

Pacek makes clear the researchers aren’t saying big government is necessarily better. “This is not the end of the debate, only to provide more food for thought,” he said.