Abstract
This study discovers evidence of a bidirectional causation between nighttime lights and happiness using the panel Granger non-causality tests of a short (balanced) panel data of 132 countries, within the period from 2008 to 2012. There are different findings throughout the six geographical regions. A bidirectional causation is observed for Latin America and the Caribbean, while a unidirectional causality is from happiness to nighttime lights for East Asia and Pacific, Europe and Central Asia, and the Middle East and North Africa. In Sub-Saharan Africa is found, the situation is from nighttime lights to happiness. These findings are complemented by the impulse response function, various decomposition analysis, and their estimates of panel random (or fixed) effect models. This study offers an insight that nighttime lights are required for a happy society.
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