Media briefing

Direct Democracy Makes People Happy

ph. Studies of what makes people happy have found that employment and low inflation are two key factors, but what about the effect of democracy? In a systematic empirical analysis of the effect of different political systems on happiness, Professors Bruno Frey and Alois Stutzer showed that the more extensive the political participation rights of citizens, the more satisfied they were with their lives. Their research, published in the Economic Journal, used data from 6,000 residents of Switzerland to show that people are happier the greater the local level of democracy. What is more, this increased happiness stems more from actual participation in the democratic process than from the outcome of the process itself.

Because constitutional arrangements are fairly stable over time, analyses of the effect of political institutions on happiness have to be carried out on different constitutions at one moment in time. The problem of comparing across countries is that numerous other factors vary and it is difficult to isolate the sole effect that political systems play. The researchers overcame this problem through a cross-regional comparison that used survey data from the 26 different regions of Switzerland. Due to the federal structure of Switzerland, the different regions control major areas of decision-making (e.g. changing state laws, referenda to prevent new expenditure, etc.) and the degree of control varies greatly between the regions. In some, citizens have many opportunities of directly participating in the democratic process via referenda and initiatives; while in others, these possibilities are severely restricted.

The study was based on a survey of more than 6,000 people. The answers to questions were compared against standard economic and demographic data and against the degree of possible democratic participation. The results highlight the usual determinants of individual well being, such as being employed, married, etc. And as with other studies, the effect a higher income has on happiness is relatively small and statistically weak.

But the effect which direct democratic participation has on happiness is large. For example, the results indicate that the happiness of a citizen who moves from Geneva (the region with the lowest participation possibilities) to Basel Land (the region with the highest participation possibilities) is considerably increased. In monetary terms, happiness is raised by as much as if this person moved from a monthly income of less than £770 to one of more than £2,310.

Frey and Stutzer conclude, ‚Happiness not only depends on economic factors but also on how well developed democracy is. The study’s main finding establishes political participation as an important determinant of citizens‘ well-being.‘

There are two possible reasons why a higher degree of direct democracy may raise individuals‘ sense of well-being. First, due to the more active role of citizens, politicians are better monitored and controlled, and government decisions are subsequently closer to the wishes of the people. Second, the institutions of direct democracy extend the opportunities to get involved in the political process. Experimental evidence suggests that people value this procedural effect in addition to the actual outcome of the activity.

To discover which of these two reasons is responsible for the happiness that democracy seems to bring, the researchers note that political participation in referenda is restricted to Swiss nationals and therefore only they can reap the benefits from the participation effect. Foreigners have no political participation rights but they cannot be excluded from the favourable outcome of direct democracy.

A direct comparison of the impact of democracy on foreigners and nationals, after other factors have been removed, shows that the benefits for nationals are approximately three times the size as the benefits for foreigners. This suggests that around two thirds of the benefits of democracy stem from simply being involved in the process of political decision-making. Indeed, Frey and Stutzer conclude, ‚Democracy should not only be favoured because it forces politicians to obey citizens‘ wishes, but also because people value the possibility of engaging in the political process.‘

‚Happiness, Economy and Institutions‘ by Bruno Frey and Alois Stutzer was published in the October 2000 issue of the Economic Journal. Frey and Stutzer are at the Institute for Empirical Research in Economics at the University of Zurich, Bluemlisalpstr 10, CH-8006 Zurich, Switzerland.

Citizens Want to Participate and Have a Say in What Goes on

According to recent study Swiss people are the happiest. The economist Bruno S. Frey attributes this mainly to Swiss direct democracy. In an interview for Time Magazine Frey was asked about the results of the study. The following text summarises Frey’s statements.

Frey admits that there are numerous factors which contribute towards the happiness of people, but it is also a fact that people place great value on being able to participate in the decision-making process. Above all they want to have a say in what goes on around them and not just vote for a parliament every few years. In the various Swiss cantons participation possibilities differ. Citizens living in cantons with the highest participation possibilities were also found to be the happiest.

Swiss citizens are aware of the fact that they can participate in important decisions, such as the introduction of the euro or the European constitution, and that their neighbours in Germany, for instance, can not.

In comparison to other European countries there is less disenchantment with politics in Switzerland. Participation at European parliament elections is very poor. Clearly European Union citizens feel that they have little to say in the decision-making process. The situation in Switzerland is different. Even though people’s political interest could be greater, important questions nevertheless get widely debated.

One element of the participatory possibility is that every time an issue is put to the vote citizens can decide whether or not they want to participate. It is crucial that people have the possibility to participate. If a certain issue does not interest a citizen and he decides not to participate in the vote, he acts rationally. It is not the average number of votes cast, a respectable 45% in Switzerland, that is so important, but the fact that a very large percentage of the population participates when important issues are at stake. For instance, voting figures immediately soar over European issues.

Interest in direct democracy exists in other countries but has not met with any great success. The reason is governments are loath to share their power with the people. Government leaders, who only indirectly have to listen to the people via parliament, do all they can to avoid people enjoying greater participatory possibilities in the democratic process. They go so far as to say people are too stupid. Frey, however, has been able to prove in a study carried out in Switzerland that citizens are neither stupid nor uniformed. In areas where citizens are allowed to participate they are also better informed. Danes, for example, after several votes on European Union issues, are better informed than Germans, who have never been called upon to vote on a European issue.

The Swiss have reservations about the EU and have chosen to remain outside the Union. Their reasons are more of a political nature and not economic. The EU provides its citizens with little opportunity to participate and its decisions are centralist. The European parliament cannot possibly substitute direct democracy. If Switzerland were to join the EU, it would no longer be possible to vote on key issues. For this reason it is understandable that a great many Swiss are sceptical about the EU. They see that when it comes to taking decisions centralism does not make sense. Decentralization is better. That does not mean that Switzerland wants to sever its ties from the EU. On the contrary, Switzerland enjoys excellent economic relations with EU countries.

David Bracewell on Participatory Democracy

In Switzerland participatory democracy has evolved over a century to a high art form. Citizen empowerment is entrenched at federal, canton and communal levels. Citizens take on broad responsibilities and much more is expected of them than in representative democracies. They may initiate referenda on any subject they choose, may call a referendum via petition to remove legislation or bylaws that have been proposed by their representatives, set priorities for municipal budgets as well as set social and planning objectives.

The study, “Happiness and Economics: How the Economy and Institutions Affect Human Well-Being”, by Professor Bruno Frey and Alois Stutzer concludes that the contentment of a nation’s citizens is linked to the level of political and social empowerment they feel they have. A key finding here was that highly developed democratic systems that permit individual involvement had a far greater impact on health and well-being than rising income levels. The extraordinary long-term stability of Swiss society, with 3 major ethnic groups coexisting peacefully alongside each other, is testament to the fact that where citizens control the agenda, stability and contentment is enhanced. This is not what we are led to believe in representative democracies, where political paternalism is endlessly touted as a check on ‘mob rule’.