How Do Institutions Affect Happiness and Misery? A Tale of Two Tails

We generalize the discussion of the relevant determinants of happiness by asking the question if the same factors, more specifically the same institutional factors, affect happiness and misery. Focusing on five formal and informal factors and applying a combined approach to estimating happiness in four categories – misery, moderately dissatisfied, moderately satisfied, and happy – allows us to estimate if factors shift or skew the distribution of subjective wellbeing. We find that legal quality and social trust shift the distribution, i.e. a smaller proportion of people in misery and a larger proportion of people with happiness; in contrast, democracy, religiosity, and voter turnout affect a certain tail of the distribution of wellbeing rather than influence both the happy and the unhappy at the same time.