Studies of what makes people happy have found that employment and low inflation are two key
factors, but until now there has been no research on the effect of democracy. In the first systematic
empirical analysis of the effect of different political systems on happiness, Professors Bruno Frey
and Alois Stutzer show that the more extensive the political participation rights of citizens, the
more satisfied they are with their lives. Their research, published in the latest issue of the
Economic Journal, uses data from 6,000 residents of Switzerland to show that people are happier
the greater the local level of democracy. What is more, this increased happiness stems more from
actual participation in the democratic process than from the outcome of the process itself.
Because constitutional arrangements are fairly stable over time, analyses of the effect of political
institutions on happiness have to be carried out on different constitutions at one moment in time.
The problem of comparing across countries is that numerous other factors vary and it is difficult to
isolate the sole effect that political systems play. The researchers overcome this problem through a
cross-regional comparison that uses survey data from the 26 different regions of Switzerland. Due
to the federal structure of Switzerland, the different regions control major areas of decisionmaking
(e.g. changing state laws, referenda to prevent new expenditure, etc.) and the degree of
control varies greatly between the regions. In some, citizens have many opportunities of directly
participating in the democratic process via referenda and initiatives; while in others, these
possibilities are severely restricted.
The study is based on a survey of more than 6,000 people carried out between 1992-4. The degree
of happiness attributed to these people is based on their answers to the following question: How
satisfied are you with your life as a whole these days? The respondents could choose from a 10-
point scale of predetermined answers that ranged from 'completely satisfied' to 'completely
dissatisfied'. According to psychologists, the responses to such questions correspond well to reallife
manifestations of personal well-being such as frequent smiling and successful social
interactions.
The answers to these questions are compared against standard economic and demographic data
and against the degree of possible democratic participation. The results highlight the usual
determinants of individual well being, such as being employed, married, etc. And as with other
studies, the effect a higher income has on happiness is relatively small and statistically weak.
But the effect direct democratic participation has on happiness is large. For example, the results
indicate that the happiness of a citizen who moves from Geneva (the region with the lowest
participation possibilities) to Basel Land (the region with the highest participation possibilities) is
considerably increased. In monetary terms, happiness is raised by as much as if this person moved
from a monthly income of less than £770 to one of more than £2,310.
Frey and Stutzer conclude, 'Happiness not only depends on economic factors but also on how well
developed democracy is. The study's main finding establishes political participation as an
important determinant of citizens' well-being.'
There are two possible reasons why a higher degree of direct democracy may raise individuals'
sense of well-being. First, due to the more active role of citizens, politicians are better monitored
and controlled, and government decisions are subsequently closer to the wishes of the people.
Second, the institutions of direct democracy extend the opportunities to get involved in the
political process. Experimental evidence suggests that people value this procedural effect in
addition to the actual outcome of the activity.
To discover which of these two reasons is responsible for the happiness that democracy seems to
bring, the researchers note that political participation in referenda is restricted to Swiss nationals
and therefore only they can reap the benefits from the participation effect. Foreigners have no
political participation rights but they cannot be excluded from the favourable outcome of direct
democracy.
A direct comparison of the impact of democracy on foreigners and nationals, after other factors
have been removed, shows that the benefits for nationals are approximately three times the size as
the benefits for foreigners. This suggests that around two thirds of the benefits of democracy stem
from simply being involved in the process of political decision-making. Indeed, Frey and Stutzer
conclude, 'Democracy should not only be favoured because it forces politicians to obey citizens'
wishes, but also because people value the possibility of engaging in the political process.'
Note for Editors: 'Happiness, Economy and Institutions' by Bruno Frey and Alois Stutzer is
published in the October 2000 issue of the Economic Journal. Frey and Stutzer are at the Institute
for Empirical Research in Economics at the University of Zurich, Bluemlisalpstr 10, CH-8006
Zurich, Switzerland.
For Further Information: contact Bruno Frey on 00-411-634-3730 (email:
bsfrey@iew.unizh.ch); Alois Stutzer on 00-411-634-3731 (email: astutzer@iew.unizh.ch); RES
Media Consultant Romesh Vaitilingam on 0117-983-9770 or 07768-661095 (email:
romesh@compuserve.com); or RES Media Assistant Niall Flynn on 020-7878-2919 (email:
nflynn@cepr.org).