EU referendum: Will Brexit make you happier? It depends on whether you’re frightened by freedom

Most analyses of the impact of a potential Brexit from the EU naturally focus on the economic costs and benefits as a proportion of GDP. But what about the potential impact on subjective well-being or life satisfaction? Would Brexit make people happier? The answer will of course be found in the revealed preference on the day of the referendum. The way people vote will reflect their subjective well-being. They’re not going to vote for something they disagree with. 

 

However, there are also deeper questions regarding attitudes towards economic freedom and control, which may not necessarily be reflected in the out-turn of the voting but which will ultimately determine subjective wellbeing on this issue.

 

There is a powerful relationship in the economic literature between economic freedom and subjective well-being. The transmission mechanism probably works in two ways: first, the direct route through feelings of being in control; second, via the indirect route from freedom to stronger economic performance (higher per capita income) to greater subjective well-being.

 

 

The direct transmission mechanism reflects the psychological benefits of freedom above and beyond any economic benefits from stronger economic growth. Consequently, it would seem that those favouring Brexit will need to argue parallel messages of control and consumption to connect with the broader electorate. But will it be enough?

 

The late Nobel Laureate James Buchanan argued that there are four motivations for intervention in the economy: managerial socialism, paternalistic socialism, distributionist socialism and parental socialism. The first three are much weaker in the twenty-first century than they once were, but the final one remains highly influential. Buchanan argued – disapprovingly – that people seek order over uncertainty, and they are afraid to be free. In effect, the state stands in loco parentis, and the general public seek to have values imposed on them. The order that this provides is seen as worth the sacrifice in liberty. 

 

Consequently, the entire Brexit debate is at root a clash of worldviews between those who want, in the words of US philosopher, John Tomasi, a “much thicker concept of economic liberty” on a par with political liberty, and those who fear the very thought. So whether the Brexit vote will make you happier or sadder ultimately depends on your fundamental economic worldview. 

 

 

I would argue that, around the world, economically freer people are generally wealthier and happier – people like free choice. But both the Leave and Remain camps could exploit this influence. Those favouring exit could point to the greater power over our own affairs that Brexit would entail, with the UK Parliament “back in control”. Those favouring the status quo could point to purported opportunities and choices available inside the EU, but unavailable outside. Both angles exploit the freedom argument, but in a different manner.

 

Citizens of rich countries are happier with their lives than are citizens of poor countries. We’ve not reached the satiation point where economic growth does not improve subjective well-being. Consequently, the impact (or not) of Brexit on subjective well-being will be shaped by faster or slower growth. 

 

Unfortunately, despite my own strong convictions on potentially faster growth from Brexit – with the right policy choices – I don’t expect the referendum campaign to settle the issue in the minds of the voters. There will be more heat than light. This will push the debate back towards a battle of worldviews full stop.