This paper analyses life satisfaction in transition countries using evidence from the World Values Survey. The paper demonstrates that individuals in transition economies on average record lower values of self-reported satisfaction with life compared with those in non-transition countries. An econometric analysis shows that females, people with higher levels of education and higher incomes are happier, and happiness declines with age until the early-fifties. Self-employed people in transition countries show a higher level of satisfaction relative to full-time employees, in contrast to evidence from non-transition countries. A comparison across time for a smaller sample of countries shows that life satisfaction levels have returned close to pre-transition levels in most cases, after a dip in the mid1990s. In addition, satisfaction levels are highest in those countries where market-oriented reforms are most advanced and where inequality is lower.

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This paper uses data from a large survey of firms across 26 transition countries to examine the determinants of trust in the transition process. We first introduce a new measure of trust between firms: the level of prepayment demanded by suppliers from their customers in advance of delivery. Using this new measure, we confirm earlier findings that trust is higher where firms have confidence in third party enforcement through the legal system. However, the fairness and honesty of the courts are a more important determinant of interfirm trust than are the courts' efficiency or ability to enforce decisions. We then examine the role of business networks in building trust and find that networks based around personal ties-family and friends-and business associations actively promote the development of trust, while business networks based on enterprise insiders and government agencies do not. Finally, we find that country-level effects are significantly more important determinants of interfirm trust than are firm-level effects.

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