[P]olitical and fiscal decentralization have a positive and significant effect on individuals’ overall happiness. Fiscal decentralization also exerts a significant effect on the level of satisfaction with political and economic institutions and with the education and health systems, whereas the effect of political decentralization on these variables is more limited. The results show that citizens seem to be happier with the actual capacity of their local governments to deliver than with the general principle that they can have a say on their daily politics and policies.
The paper is by Luis Diaz-Serrano and Andrés Rodríguez-Pose . They use survey data from 29 European countries covering the years 2002, 2004, 2006, and 2008.