Are the Roads to Happiness the Same

Abstract

The question of whether increasing income increase happiness has long been a concern, but consensus is hard to reach. The divergences mainly lie in studies of time series itself and the results of time series and cross-section studies. This paper uses 8-10 years of data from 124 countries to further explore this issue through three methods: Time series analysis, cross-section analysis and panel data analysis. We find that 33 out of 124 countries show no significant effect of income on happiness, while 56 countries show slightly positive effects and 35 countries show extremely high positive effects. Moreover, contrary to the intuition, there is no evidence that income no longer increases happiness in high-income countries, or that income can easily increase happiness in low-income countries.