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Recent research has shown that the degree to which people feel they are in control of their lives is an important correlate of individual happiness, where those that feel more in control are also found to be systematically happier. In turn, the economic sources of perceived life control are only insignificantly established in the relevant literature. The present paper employs individual data from the most recent version of the World Value Survey, covering the period from 1981 to 2013, to establish the macro-determinants of individual life control. We find that living in a country with high overall economic freedom is a major determinant of feeling in control of one's own life. The effect is very similar for individuals in high and low income countries, while the impact of democracy is negligible in both cases. Interacting relative income with economic freedom, we find that - contrary to conventional wisdom - it is by far the lower income groups that derive the biggest gain of perceived life control from living in a country with comparatively high economic freedom.

We address empirically trust as a determinant of support for government intervention. The central notion provided in the present paper is that the influence of generalized social trust on intervention attitudes is conditional on the perceived reliability, honesty, and incorruptibility of state actors and of major companies. Starting point is an idea by Aghion, Algan, Cahuc, and Shleifer (2010) that individuals who generally distrust others have a stronger taste for a regulation of economic activities, while people with high interpersonal trust are in favor of less strict regulations and state control. This line of argumentation neglects that (lack of) trust spills over to distrust in both governmental as well as in private institutions. People who tend to (dis-)trust other unknown people also tend to (dis-)trust state actors and private sector actors. Estimating the determinants of interventionist preferences with data from the World Values Survey/European Values Study for approximately 100,000 -115,000 individuals in 37 OECD- and EU-countries, we show that the impact of social trust on government intervention attitudes is conditional on individual confidence in state actors and in companies.

This paper addresses empirically determinants of individual support for the Welfare State. We examine the interrelation of informal institutions with the perceived quality of a country's institutional framework. As a proxy for informal institutions, we concentrate on three core beliefs (trust in other people, perceived control over one's own life, and religiousness) which reflect different aspects of the way people feel about internal and external constraints in managing their own lives. To analyze preferences we follow a comprehensive concept of the Welfare State, measuring attitudes toward its two basic roles, (income) redistribution and government intervention. For this purpose the paper uses survey data from the World Values Survey/European Values Study as well as different indicators for governance quality. Our results indicate that people who interpret their life course as being not at their own disposition report a substantially more positive attitude toward income equalization and government interventions. A higher quality of public administration and low confidence in major private companies amplify preferences for redistribution and intervention of people under such an external locus of control. Social trust is generally associated with higher support for redistribution and government intervention only if perceived quality of administration is high and confidence in companies is low. People who assert themselves as religious are less favorable toward income equalization. While variation in administration quality does not appear to have an impact on the relationship between religiousness and income equalization preferences, religious people are substantially less supportive of redistribution and government intervention especially if confidence in major companies is high.

AbstractWhile confidence in the business sector is crucial for well-functioning markets, there is surprisingly little empirical work on its sources. Available research recognizes generalized social trust and macroeconomic performance (especially unemployment and economic growth) as major forces explaining confidence in institutions and organizations in general. By assuming that confidence in companies hinges on rules, formal procedures, and practices that shape how organizations function, economic regulation is frequently advocated to foster confidence in companies, not least as it is supposed to reduce the scope for opportunistic behavior. Based on individual-level data from World Values Survey/European Values studies and economic regulation data from the Economic Freedom of the World project we investigate statistical associations of confidence in major companies with generalized social trust and macroeconomic performance as well as the intensity and quality of business regulation. From an economic policy perspective our findings suggest that confidence in the business sector can be facilitated by an implicit guarantee from governments of fair and impartial treatment.

It is frequently claimed that high levels of generalised trust are conducive for economic reforms. In contrast, the "traditional view" on institutional and political constraints on the executive (IPCE) postulates that high IPCE tend to paralyse the decision-making process, thus blocking required policy changes. By stressing credibility issues of economic reforms and transaction cost for special interest groups, a more positive view however sees IPCE as potentially conducive to reforms. This paper empirically explores the significance of these claims for the case of economic deregulation. In particular, it elaborates on the hypotheses that IPCE do not impact on economic reforms in an environment of high generalised trust and that the positive impact of trust increases with the extent of IPCE. The results provide evidence in favour of the traditional view on IPCE. However, it is also shown that IPCE are an obstacle for economic policy liberalisation only in relatively low trusting environments. In contrast, a robust positive correlation of generalised trust with the extent of economic deregulation is isolated, and trust unfolds a particular strength with increasing levels of IPCE.

According to the fiscal federalism literature sub-central budget constraints become softer when local governments are more dependent on revenues over which they have no discretion. As a consequence of higher "transfer dependency", sub-central governments can expect to be bailed out by the central government and therefore tend to accumulate higher levels of debt. We test this conjecture with data from Austrian municipalities. Austria is a fiscally highly centralised federation in which tax autonomy at the sub-central level is almost absent. Our identification strategy is based on a discontinuity caused by a special regulation on population weights in the tax sharing agreement between central government and the municipalities. We analyse the discontinuity in the conditional expectation of borrowing given population size to unveil an average causal effect of the treatment. Our results indicate that in line with theoretical expectations municipalities with higher revenue dependency observe higher net borrowing per capita. We also find that almost one half of the observed discontinuity works through an investment channel. Net borrowing is spatially correlated.

In this paper we explore the impact of political factors on redistribution across the states in the German Landerfinanzausgleich. From a public choice perspective the smaller states are supposed to have a higher influence on decisions in the second legislative chamber due to a lower shadow price of their votes, which implies a higher bargaining power. As the federal government's policy depends on a majority in the second chamber there is an incentive to buy smaller states' votes. Controlling for GDP per capita, we find statistically significant support for our hypotheses. 3 Tables, 35 References. Adapted from the source document.