Does research on happiness prove markets are a bummer? Political scientist Benjamin Radcliff of Notre Dame University, summing up his recent studies in Social Forces and the American Political Science Review, says survey research shows that "the more we supplement the cold efficiency of the free market system with interventions that reduce poverty, insecurity and inequality, the more we improve the quality of life."
But contrary to his expectations, the Dutch sociologist Ruut Veenhoven, editor of the Journal of Happiness Studies, found in a 2000 paper that a larger welfare state does not create "any well-being surplus." A 2001 National Bureau of Economic Research paper by the economists Alberto Alesina, Rafael Di Tella, and Robert MacCulloch indicated that inequality has no negative effect on happiness in the U.S. unless you're a rich leftist.
More recently, a 2006 study by the University of Regina's Tomi Ovaska and the University of West Virginia's Ryo Takashima, published in the Journal of Socio-Economics, shows that the variable most strongly correlated with a nation's average self-reported happiness is "economic freedom" as measured by the Fraser Institute's Economic Freedom of the World index.
To be sure, the egalitarian Swedes aren't suffering, but neither are the more market-friendly Americans. Radcliff writes that "emancipation" from the market "is the principal political determinant of subjective well-being." But when welfare states work relatively well, it's because they can draw on the big bucks generated by reasonably free and well-functioning markets.