The elusive curse of natural resources on happiness

Abstract

A few recent studies attempt to extend the resource curse into subjective well-being. This nascent literature provided evidence supporting the existence of the resource curse in happiness outcomes. However, this finding may suffer from endogeneity problems. This study corrects endogeneity problems of all included independent variables using the dynamic panel model framework and the system generalized method of moments estimator that overcomes weak and proliferation of instruments and corrects for the downward biased standard errors of the coefficient estimates. Utilizing a large panel of 112 countries over the 2006–2019 period, we find that the adverse effects of resource rents in aggregate and disaggregate (including oil rents) on happiness are not supported by the data. These findings are immune to extensive robustness checks and alternative empirical specifications. Natural resources appear to be neither a curse nor a blessing in subjective well-being.