Because they’re available to all, spending on public goods tends to be less politically contentious than other spending categories, such as antipoverty programs or unemployment benefits. Flavin suspected spending on these types of goods would be linked to higher levels of happiness in a given state. By devoting resources to amenities that otherwise would probably not exist, “government can help to create and sustain communities that are more enjoyable to live in,” Flavin writes.
Beyond that, it seemed likely that spending on public spaces in particular — such as parks, libraries and nature preserves — would help promote social cohesion in ways that previous research has shown to be beneficial to well-being. Finally, there’s the simple fact that public investment tends to increase property values, and people with more money tend to report higher levels of life satisfaction, all else being equal.
To test his theory, Flavin collected individual-level data from the General Social Survey for the years 1976 to 2006. He was specifically interested in the survey’s question on life satisfaction, which asks respondents to rate their well-being on a three-point scale: “Taken all together, how would you say things are these days — would you say that you are very happy, pretty happy, or not too happy?”
He aggregated the GSS data at the state level and paired the responses with census data on state finances over the same period. He defined public goods as spending that fell into the following five categories: libraries, parks and recreation, natural resources, highways (excluding toll roads) and police protection. He calculated spending on these categories as a share of total gross state product in a given year, which allows for comparisons between states and years, and “accounts for the fact that richer states may spend more (on a per capita basis) on a wide array of government programs than poorer states,” as the paper explains.
Flavin also adjusted the data for a wide array of demographic variables known to influence well-being: employment, gender, race, age, income, marital status, education, health and church attendance.
When he ran the numbers, he found a strong and statistically significant relationship between public-goods spending and self-reported happiness. All else being equal, for public-goods spending moving from one standard deviation below the average to one standard deviation above it produced roughly a five-percentage-point increase in the likelihood of a respondent rating themselves as “very happy.” That’s similar to the well-being increase associated with going from below-average to above-average family income.
If money buys happiness, in other words, then so does government spending on public goods.
Interestingly this relationship didn’t hold when considering all government spending or when considering spending on other categories such as welfare or education. Those categories did not produce a meaningful change in well-being in any direction. Flavin also notes that the happiness boost from public-goods spending is roughly the same across a wide range of demographic variables: race, income, education, etc. That suggests public spending on categories accessible to everyone has a similar effect on the well-being of everyone.
As the University of Michigan’s Marina Whitman noted recently, spending on public goods has been under pressure from both political parties in recent years: Republicans have been focused on cutting taxes that pay for that spending, while Democrats have been more interested in expanding the social safety net for people who need it most. The result is that, at the federal level at least, there’s little discretionary money left over to spend on things like roads, bridges and parks.
Americans are deeply ambivalent about the proper role of government in providing public goods and other services. An April 2017 Pew Research Center poll found, for instance, that 48 percent said they prefer a larger government providing more services, while 45 percent said they prefer a smaller government with fewer services.
Part of the reason for that is that few American political leaders appear to be willing to make a strong positive case for taxation. Contrast recent Democratic contortions on the question of middle-class tax increases, for instance, with how Danish author and happiness expert Meik Wiking writes about them: “We are not paying taxes, we are investing in our society. We are purchasing quality of life.”
Flavin’s research on the well-being benefits of public spending suggests that Wiking’s got a point.