Governance as a determinant of quality of life: A cross-indicator analysis of OECD countries

Abstract

This study examines whether the quality of state governance influences individuals’ quality of life. Specifically, it investigates how countries’ governance capacities shape the welfare and well-being of their citizens. Using a sample of 38 OECD member countries, the research analyzes data from the World Bank's Worldwide Governance Indicators (and its sub-dimensions), the OECD's Better Life Index, and the US News Quality of Life Index. To test the relationships between governance capacity and quality-of-life dimensions, 91 hypotheses were formulated and examined through regression analyses. The findings reveal that higher levels of governance capacity have a significant and positive impact on various dimensions of quality of life, including housing, income, job security, environmental quality, education, health, life satisfaction, safety, and work–life balance. However, governance performance does not appear to enhance civic engagement, suggesting that institutional capacity may improve welfare outcomes without necessarily fostering participatory citizenship. Overall, the study demonstrates that effective governance contributes substantially to citizens’ well-being. It also highlights the importance of integrating citizen participation and transparency into governance frameworks to ensure that improvements in governance quality translate into both objective and subjective dimensions of life quality. These insights provide valuable implications for policymakers, public administrators, and researchers seeking to strengthen the governance–welfare nexus. This study uniquely integrates three major international data sources to provide one of the most comprehensive empirical assessments of how governance capacity shapes welfare outcomes across advanced economies.

Points for practitioners

Effective governance—particularly strong rule of law, regulatory quality, corruption control, and government effectiveness—substantially enhances core quality-of-life outcomes. Practitioners should prioritize transparent decision-making, integrity systems, and reliable public service delivery, as these create measurable welfare gains across housing, income, safety, environment, education, and life satisfaction. However, improved governance alone does not automatically increase civic engagement; strengthening participatory mechanisms requires deliberate institutional design and culturally rooted strategies.