Corruption, Happiness, Social Trust and the Welfare State: A Causal Mechanisms Approach

Abstract

Does a more generous welfare state make people happier and increase their life satisfaction? Available empirical research gives a clear and positive answer to this question. This goes counter to many arguments that the welfare state creates a culture of dependency, leads to heavy-handed bureaucratic intrusions into private life, creates problems concerning personal integrity, is bad for economic growth, implies stigmatization of the poor, and crowds out civil society and voluntarism. This counterintuitive result is explained by to which degree social programs are universal in the coverage and structure. Four common misunderstandings of universal welfare states are discussed and refuted: This it is too costly for the economy, that it can not be combined with individual choice, that it does not redistribute in favour of the poor and that it should be detrimental to economic growth. Using a “social mechanism” approach, it is argued that the relation between subjective well-being and universal welfare states operates in a complicated causal pattern with two other variables, the degree of corruption and the level of social trust in society. This approach is used to explain why empirically, countries tend to cluster so that countries with large and mostly universal welfare state programs also have low levels of corruption, a high degree of social trust, and high levels of happiness and social well-being. And vice versa, why countries with smaller welfare systems tend to be higher on corruption, have lower levels of social trust, and lower levels of social well-being.