Sub-national Fiscal Activity as a Determinant of Individual Happiness: Ideology Matters

Though there has been a recent outpouring of studies on the determinants of individual happiness, there remains a paucity of research on the influence of specific sub-national government policies. Additionally, theoretical expectations about how fiscal variables influence happiness are unclear, making further empirical research imperative. Combining survey data and aggregate information about state and local government revenue and expenditures within the United States, we draw inferences about whether or not such activities affect individual happiness. We find no indication that the overall level of state or local fiscal activity affects life satisfaction. However, we offer evidence that personal happiness could be increased with an increase in the percentage of sub-national expenditure devoted to public safety. We also find that there are notable differences across ideological groups (conservatives, moderates, and liberals) with respect to how much public safety influences happiness, as well as how some other fiscal variables influence happiness. We conclude that ideology mediates the impact of fiscal variables on life satisfaction.