The Impact of Governance on Happiness: Evidence from Quantile Regressions

Authors: Chiung-Ju Huang

Abstract:

This study utilizes the quantile regression analysis to examine the impact of governance (including democratic quality and technical quality) on happiness in 101 countries worldwide, classified as “developed countries” and “developing countries”. The empirical results show that the impact of democratic quality and technical quality on happiness is significantly positive for “developed countries”, while is insignificant for “developing countries”. The results suggest that the authorities in developed countries can enhance the level of individual happiness by means of improving the democracy quality and technical quality. However, for developing countries, promoting the quality of governance in order to enhance the level of happiness may not be effective. Policy makers in developed countries may pay more attention on increasing real GDP per capita instead of promoting the quality of governance to enhance individual happiness.

Keywords: Governance, happiness, multiple regression, quantile regression.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1339510

References:

[1] GNH Centre Bhutan, The Story of GNH, Retrieved from: www.gnhcentrebhutan.org/what-is-gnh/the-story-of-gnh/
[2] R. Boarini, “The OECD Better Life Initiative,” The Statistics Newsletter – OECD, no. 52, pp. 14-43, 2011.
[3] J. Helliwe, First World Happiness Report Launched at the United Nations, The Earth Institution Columbia University, 2012, Retrieved from: http://www.earth.columbia.edu/articles/view/2960
[4] J. F. Helliwell, H. Huang and S. Wang, “The geography of world happiness,” in World Happiness Report 2015, J. Helliwell, R. Layard and J. Sachs Ed., pp. 14-43, 2015.
[5] G. W. Scully, “The institutional framework and economic development,” Journal of Political Economics, vo1. 96, no. 3, pp. 652-662, 1988.
[6] J. Sachs and A. Warner, “Natural resource abundance and economic growth,” National Bureau of Economic Research Working Paper, No.5398, 1995.
[7] D. Rodrik, “TFPG Controversies, institutions and economic performance in East Asia,” NBER Working Paper, No. 5914, 1997.
[8] R. E. Hall and C. I. Jones, “Why do some countries produce so much more output per worker than others?” Quarterly Journal of Economics, vol. 114, no. 1, pp. 83-116, 1999.
[9] D. Kaufmann, A. Kraay, and P. Zoido, “Governance matters,” World Bank Policy Research Working Paper, No. 2196, 1999.
[10] S.-J. Wei, “Negative alchemy? Corruption and composition of capital flows,” OECD Technical Paper, No.165, 2000.
[11] D. Acemoglu, S. Johnson, and J. Robinson, “The colonial origins of comparative development: An empirical investigation,” American Economic Review, vol. 91, no. 5, pp. 1369-1401, 2001.
[12] H. L. F De Groot, G. J. Linders, P. Rietveld, and U. Subramanian, “The institutional determinants of bilateral trade patterns,” Kykios, vol. 57, no. 1, pp. 103-123, 2004.
[13] R. Rigobon and D. Rodrik, “Rule of law, democracy, openness and income: Estimating the interrelationships,” Economics of Transition, vol. 13, no. 3, pp. 533-564, 2005.
[14] H. Jalilian, C. Kirkpatrick, and D. Parker, “The impact of regulation on economic growth in developing countries: a cross-country analysis,” World Development, vol. 35, pp. 87-103, 2006.
[15] E. N. Gamber and A. K. S. Scott “A threshold analysis of the relationship between governance and growth,” International Economic Journal, vol. 21, no. 2, pp. 255-278, 2007.
[16] V. C. Arusha, “Government expenditure, governance and economic growth,” Comparative Economic Studies, vol. 51, no. 3, pp. 401-18, 2009.
[17] A. Y. Evrensel, “Corruption, growth, and growth volatility,” International Review of Economics and Finance, vol. 19, pp. 501-514, 2010
[18] M.-P. Marı´a-Teresa, M.-A. Galindo-Martı´nb, and D. Ribeiro-Sorianoc, “Governance, entrepreneurship and economic growth,” Entrepreneurship and Regional Development, vol. 24, pp. 865-877, 2012.
[19] J. C Ott, “Government and happiness in 130 nations: Good governance fosters higher level and more equality of happiness,” Social Indicators Research, vol. 102, no. 1, pp. 3-22, 2011.
[20] R. Veenhoven, World database of happiness. Erasmus University Rotterdam, Netherlands, 2010. Retrieved from: http://worlddatabaseofhappiness.eur.nl.
[21] J. Helliwell and H. Huang, “How’s your government? International evidence linking good government and well-being,” British Journal of Political Science, vol. 38, pp. 595–619, 2008.
[22] R. Koenker and G. S. Bassett, “Regression quantiles,” Econometrica, vol. 46, no. 1, pp. 33-50, 1978.