Public Policy and Human Happiness: The Welfare State and the Market as Agents of Well-Being

The market and the welfare state are the institutions widely agreed to be the main alternatives available for generating and distributing human well-being. Contending arguments make powerful claims for the superiority of each, reflecting as they do the basic ideological division shaping political conflict in capitalist democracies. In this chapter we attempt an empirical appraisal of this issue, using the extent to which individuals find their lives to be satisfying as an evaluative metric. Considering rates of life satisfaction in the advanced industrial democracies, we find that satisfaction increases as the level of state intervention in the market economy increases. The data suggest that maximizing the “decommodification” provided by the welfare state does indeed help to maximize human happiness. We conclude with a discussion of the practical and theoretical ramifications of these finding