Expenditure decentralization, Does it make us happier? An empirical analysis using a panel of countries.

Resumen

In this paper we analyze whether fiscal decentralization of education, health, housing, social protection, recreation, culture and religion, public order and safety, and transportation has a significant effect on happiness. We specify a multilevel ordinal logit model with I intercept random and fixed effects. This hinges upon one ordinal endogenous variable and two types of exogenous factors: i), individual factors that represent the characteristics of individuals, and ii) aggregated factors, which reflect the level of decentralization in the above mentioned areas of government spending. The database being used contains 89,584 observations of 30 countries. The estimations reveal that the decentralization of recreation, culture and religion, housing, education and health are significant in explaining happiness. While decentralization of recreation, culture and religion, and health improve the level of individual satisfaction, a negative effect was found in relation to housing and education.