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Journal of Happiness Studies

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01-06-2008 | Research paper

Direct democracy and life satisfaction revisited: new evidence for Switzerland

Authors: David Dorn, Justina A. V. Fischer, Gebhard Kirchgässner, Alfonso Sousa-Poza

Published in: Journal of Happiness Studies | Issue 2/2008

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Abstract

We re-evaluate the relation between cantonal direct democracy and perceived subjective well-being in Switzerland using new data from the Swiss Household Panel. In addition, this study goes beyond previous work by carefully controlling for cultural determinants of happiness such as languages and religion. We find that once language is controlled for, no robust significant relationship between the extent of direct democracy and life satisfaction can be observed. The results also show that direct democracy does not affect well-being within language groups in Switzerland.

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See, e.g., Frey and Stutzer (2000, 2000a, 2000b), as well as Stutzer and Frey (2003).

See, e.g., Feld and Savioz (1997) for the impact of direct democracy on economic welfare, Feld and Kirchgässner (2001) for its effect on public finances, or Feld et al. (2006) for its effect on income (re)distribution.

Note however that at the federal level, citizens from all cantons have identical political rights with regard to important policy fields such as foreign policy, trade, or defense.

International cross-section studies with macro-level data, however, present inconclusive results (see, e.g., Schyns 1998; Veenhoven 2000; Inglehart and Klingeman 2000). An exception is the study by Dorn et al. (2006).

The share of those speaking the fourth language, Rhaeto-Romanic, is about 1% of the Swiss population and, therefore, in our context negligible. Moreover, practically all of these people speak fluent German, the main language of Graubünden, which is the only canton where Rhaeto-Romanic is spoken.

See also Lijphart (1979) who, in a study of the structure of party affiliations in four multilingual countries (including Switzerland), concluded that “because language is a crucial differentiator among nations, it is bound to be a major cleavage and a main source of partisan differences in ‘nations’ that are not linguistically homogeneous” (p. 453). Investigations of mobility patterns of commuters of centrally located major Swiss regions reveal that people tend to commute along the language borders rather than across them. For both the German- and French-speaking language regions, for more than 97% of the labor force residence and location of work place coincide (see http;//www.pendlerstatistik.ch)

For differences between Europeans and Americans with respect to the perception of (economic) inequality see Alesina et al. (2004). See also the various contributions in Diener and Suh (2000) and Ahuvia (2002).

Other dimensions of individual culture, e.g., trust and social capital, include both a time-invariant component and one that is influenced by past individual behavior. In this anaylsis, we focus on the two dimensions of culture that are most stable over time, namely ethnicity and religion (Guiso et al. 2003).

Less recent cross-sectional contributions on happiness as well as suicide have employed a measure of the general level of economic development to capture income effects (e.g., Easterlin 1974; Jungeilges and Kirchgässner 2002; Oswald 1997). See also the graphical representation of countries’ happiness ratings and GDP per capita in Frey and Stutzer (2002, p. 417).

Actually, there is oversampling of two groups, the elderly and the poor. However, a representative sample can be obtained by application of transversal weights, as Frey and Stutzer do in all their papers, or by eliminating the oversampled observations (which is possible due to the construction of the dataset). As will be shown below, these two methods can lead to quite different results.

The first three categories are aggregated to increase the number of observations for the lowest category.

The macroeconomic factors include the extent of local autonomy in a canton, national income per capita, the degree of urbanization, size of canton in terms of population, and the cantonal total tax burden (Frey and Stutzer 2000, 2000a).

Geneva achieves a ‘2’ for the constitutional and statutory initiative and the statutory referendum, but a ‘1’ for the fiscal referendum. In contrast, the sub-indices for Glarus are as high as ‘6’ for the first three institutions and ‘5’ for the fiscal referendum.

Using the composite index Feld et al. (2006) identify a significant impact on income inequality and redistribution, Fischer (2005) on student performance and crime, and Feld and Kirchgässner (2001) on local and state spending, just to name a few studies.

See Frey and Stutzer (2000), and Frey and Stutzer (2000b) regarding the poor. This statement, however, does not apply to foreigners (Stutzer and Frey 2003). See also footnotes 16, and 34.

Analogous findings are obtained for the ‘belief in having political influence’, using the first wave of the SHP (1999) by including an interaction term between the index of direct democracy and being a foreigner.

The number of participating households was 4,532 in 2000, and 4,314 in 2001 (Budowski and Scherpenzeel 2004).

Only persons aged 15 or above were eligible for interview. In 2002, to about 550 persons the life satisfaction question was not applicable. About 1,300 individuals could not be reached or deliberately refused to answer. Finally, 5,600 persons’ answers were recorded.

For summary statistics for the variables of the Leu data set, see e.g., Frey and Stutzer (2000a). The distribution of the observations of the life satisfaction variable and descriptive statistics of the index of direct democracy are given in Tables A1 and A3 of the Appendix.

The calculations have been performed by using the reoprob command in Stata, Version 9.1 (see for this Frechette 2001, 2001a). Points for the Gaussian–Hermite quadrature approximation are set at 30. Since the three waves are each representative for Switzerland, estimation without weights seemed appropriate. The reoprob command does not allow clustering at the aggregate level.

An OLS regression of the index of direct democracy for the year 2000 on the three cantonal language variables yields the following result

DEMO = 4.716 German + 2.753 French + 2.250 Italian + û,

(4.72) (2.75) (2.25)

with R² = 0.612 and 23 degrees of freedom. (The numbers in parentheses are the estimated t-statistics.)

The high correlation between individual absolute and relative income impedes their simultaneous inclusion in one model. A comparison of two alternative models, one based on absolute income only, and one based on relative income only, led to no unequivocal preference of one over the other (based on their loglikelihood values). We present here the results for the model based on relative income.

These values are comparable to the official cantonal subsistence level recommended biannually by the Swiss Conference for Social Assistance (SKOS). See also SKOS (2000). Testing alternative specifications, with, first, 60% of cantonal mean income, and, second, cantonal mean income as reference income, yields no substantial differences with respect to the impact of direct democracy and the cultural variables. Estimation results are available upon request.

Similar results are obtained when the model is estimated for the three waves of the SHP separately (see Fischer 2005). Additionally, testing for various functional forms of the index of direct democracy does not reveal a considerably significant effect when culture is controlled for.

This observation holds equally if reference income is defined as 60% of cantonal average earnings. In contrast, using mean cantonal income, the term for those below this benchmark becomes equally significant. No changes however, are observed for the cultural variables and the index of direct democracy. Results are available upon request.

Only persons with ‘other Christian denominations’ report significantly higher levels of well-being (significance at the 5% level) compared to persons with ‘other/non-Christian denominations’, the reference group. This result contrasts the findings by Ferriss (2002). See Table A2 of the Appendix for details.

We only present the results for the relevant variables. The complete results can be received from the authors upon request.

61.3% of the variance of the index of direct democracy is between and only 38.7% is within the three language groups. Even if the French- and Italian-speaking cantons are considered as one language group, we still get 60.6% between and only 39.4% of the variance within the groups.

Testing cantonal mean income as reference income, a breakdown of the significance for direct democracy is already observed in model (2), when cantonal culture measures are included.

Model (5) roughly corresponds to the second equation in Frey and Stutzer (2000, Table 2, p. 927) since variables for health status and religious denomination have been added and income has been differently accounted for. Using the same specification, we were able to exactly replicate their results (see Table A4 of the Appendix). Thus, differences between their results and model (5) are due to these alterations.

‘Being a foreigner’ could be considered a cultural variable. Although it is included in the baseline model and its negative coefficient is reported in Appendix Table A2, it is too undifferentiated to measure a particular cultural background. Using information on the type of residence permit, we could show that having lived in Switzerland longer than 5 years (permit type C) exerts no differential impact on one’s perception of direct democracy’s benefits (see Table A6).

Again, testing a similar model with alternative definitions of comparison income shows that direct democracy does not add to the joint significance of the cantonal or communal cultural variables.

Estimating separate equations for Italian culture is not possible as there is only one canton, Tessin (Ticino), in which the main language is Italian, rendering the institution invariant. Moreover, because most Italian-speaking Swiss people live in this canton, the equation for the subsample with Italian family culture is also dropped.

Perception of life satisfaction and beneficial impacts of direct democracy might well be different for members of a minority in a alien cultural environment or depend on the extent to which one has adapted to the majority culture. Most of the estimation results in Table A5 of the Appendix, particularly those obtained with the full Leu sample, lend support to the view that the assessment of life satisfaction in the language-specific subsamples is not driven by the main culture of one’s environment. Moreover, the results in Table A6 of the Appendix clearly show that only Swiss residents profit from direct democracy (not controlling for individual culture), while the life satisfaction of foreigners, independent of their duration of stay, is never positively affected.

Testing the differential impact of direct democracy depending on the cultural background by interacting it with the cultural variables assumes that all remaining determinants of life satisfaction exert an identical influence across cultures. For this reason, splitting the dataset by cantonal or individual culture is the preferred method as it allows all remaining factors to equally exert differential impacts. Testing alternative models with different definitions of camparison income, for both datasets, we are able to corroborate the significant positive impact of direct democracy in French-speaking cantons.

This lack of significance in the Swiss case, however, is possibly due to the low variability of democracy levels within Switzerland. Based on a cross-national analysis with international micro-data that allows for much larger differences in democracy levels, however, we found evidence for a significant positive effect of democracy on well-being (see Dorn et al. 2006).

See footnote 6.

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Title: Direct democracy and life satisfaction revisited: new evidence for Switzerland
Authors: David Dorn
Justina A. V. Fischer
Gebhard Kirchgässner
Alfonso Sousa-Poza
Publication date: 01-06-2008
Publisher: Springer Netherlands
Published in: Journal of Happiness Studies / Issue 2/2008
Print ISSN: 1389-4978
Electronic ISSN: 1573-7780
DOI: https://doi.org/10.1007/s10902-007-9050-9

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