Is Economic Crisis Reducing Support for Markets and Democracy in Latin America? Some Evidence from the Economics of Happiness

Abstract

The severe economic crisis facing several countries in the region has led many observers to predict a backlash against market policies and even against democracy in the region. An economic crisis of such proportions should also, in theory, have negative effects on subjective well being. Our analysis, based on the 2002 Latinobarometro survey, yields only some of the expected results. We find that subjective well being has decreased, but only marginally. Satisfaction with market policies and with the way democracy is working has decreased among all groups except the very wealthy. In contrast, support for democracy as a system of government has increased, suggesting that respondents are increasingly distinguishing between democracy as system of government, and the manner in which particular governments are performing. We also find evidence of increased support for redistributive taxation among the wealthy.

JEL Classification: D63, D84, I31, J62