Socioeconomic determinants of happiness: Empirical evidence from developed and developing countries

Abstract

This study aims to understand the factors that contribute to people's happiness or life satisfaction in 166 countries (51 developed, 115 developing) from 2005 to 2020. The study considers the effects of various socioeconomic factors, such as per capita income, social support, freedom to make life choices, perception of corruption, air pollution exposure, and gender inequality, on the level of happiness. We used panel two-way robust fixed effects and panel quantile regression for empirical analysis. The results show that per capita income, social support, and freedom to make life choices positively impact happiness, while air pollution exposure has a negative impact. However, gender inequality does not significantly affect happiness levels. These findings highlight the relevance of the Easterlin Paradox, which suggests that income can mediate happiness by promoting emotional well-being, gender equality, and a clean environment. Therefore, policymakers should focus on creating a more holistic approach to improving the well-being and happiness of its citizens.