In this paper, I examine whether generalized trust and education, as well as social security policies of welfare state institutions matter for cross-national differences in subjective well-being (SWB), because knowledge on this issue is still lacking. For this purpose I integrated the insights of two sociological theories: Social Function Production theory and Actor-Centred Institutionalism. Based on these theoretical notions we derived several hypotheses, which I tested using multilevel analysis of the data from the European Social Survey (2006), in a sample of 37,237 respondents from 22 European countries. My findings indicate that various extensiveness of social security policies matter for the level of SWB, and for the impact of education on SWB. I found negative impact of low education on SWB in all countries, except in Northern and Western European countries. This might suggest that social security policies of the latter countries have diminished the negative impact of low education on SWB. Moreover, my findings indicate positive relationship between individual education and generalized trust; as well as between generalized trust and SWB in countries with all five types of social security policies.