The happiness gap in eastern Europe Simeon Djankov, Elena Nikolova and Jan Zilinsky Summary Citizens in eastern Europe are less satisfied with life than their peers in other countries. This happiness gap has persisted over time, despite predictions to the contrary by earlier scholars. It holds after controlling for a variety of covariates, such as the standard of living, life expectancy and Eastern Orthodox religion. Armed with a battery of surveys from the early 1990s to 2014, we argue that the happiness gap is explained by how citizens in post-communist countries perceive their governments. Eastern Europeans link their life satisfaction to higher perceived corruption and weaker government performance. Our results suggest that the transition from central planning is still incomplete, at least in the psychology of people. Keywords: happiness, corruption, eastern Europe JEL Classification: D73, I30, P35 Contact details: Elena Nikolova, One Exchange Square, London EC2A 2JN, United Kingdom Phone: +44 20 7338 7931; Fax: +44 20 7338 6110; email:
[email protected]. Simeon Djankov is at the Department of Finance, London School of Economics and Political Science and Visiting Fellow at the Peter G. Peterson Institute for International Economics. Elena Nikolova is a Research Economist at the EBRD. Jan Zilinsky is Research Analyst at the Peter G. Peterson Institute for International Economics. This paper is written as part of a symposium: Ukraine: Escape from Post-Soviet Legacy? The authors would like to thank an anonymous referee, Abhijit Banerjee, Erik Berglof,¨ Andrew Clark, Yuriy Gorodnichenko, Gerard´ Roland and Peter Sanfey for helpful comments. The working paper series has been produced to stimulate debate on economic transition and development.