Economic Freedom and Subjective Well-Being: Empirical Evidence from the MENA Region

Abstract

In this article, we exploit the differences in economic freedom between countries to study
the relationship between developed institutions and subjective well-being for the case of the
MENA region over the period 2007–2017, using the Least Squares method panel data
analysis. We empirically examined the link between subjective well-being and institutions
using the index of economic freedom as an institutional variable. We found that economic
freedom appears to function as a proxy for developed institutions and that the effect of
subjective well-being is more pronounced in the presence of the economic freedom variable
and these components. According to the data on happiness, the evidence suggests that
countries with better institutions of economic freedom, captured by the rule of law,
regulatory efficiency, open market and limited government, are much more likely to
experience greater subjective well-being.
JEL classification codes: O11, O43, O47, P16
Keywords: Economic Freedom, Institutions, Happiness, Subjective Well-Being