The Relationship between Government Size and Happiness

Introduction: Although the use of the happiness economy approach does not have much history, since policy makers generally make decisions in the direction of increasing well-being and public satisfaction, it becomes important to quantify the concept of mental well-being and examine the factors affecting it in order to improve happiness in society. Methods: The purpose of this research is to investigate the effect of government size on people's happiness in two different regimes according to the level of human development in 110 selected countries for the period of 2006 to 2017. For this purpose, threshold panel regression has been used. The information needed for this research includes the happiness variable from the World Happiness Information Bank, economic growth rate, unemployment rate, inflation rate and government size from the World Bank database and human development index from the United Nations Development Program. Findings: The model estimation results show that the variables of government size, economic growth, inflation and unemployment have a significant effect on happiness. According to the threshold limit calculated for the human development variable (0.577), the effect of government size on happiness is different in two regimes. Discussion: According to the findings of the research, increasing the size of the government below the threshold of human development leads to a decrease in the happiness of the people of the society, but after crossing the threshold of human development with the increase in the size of the government, the happiness of the people increases, which shows the efficiency of the government policies. Also, with the increase in economic growth, happiness increases and with the increase in inflation and unemployment, happiness decreases, and the noteworthy point is that the negative effect of unemployment is greater than the negative effect of inflation.