Does Better Institutional Structure Bring Higher Happiness? Evidence From Multi-Dimensional Panel Data Model Analysis

Abstract

In recent years, many studies have been carried out on the relationship between institutions and happiness. Although it is accepted that institutions are an important factor on happiness, that relationship may vary according to the countries, income level and time. In this study, the relationship between institutions and happiness for the period 2006-2019 in 93 countries is investigated by using three-dimensional panel data model with two units of country and per capita income and a time dimension. The findings obtained from the fixed and random effects estimators show that institutional quality has a positive effect on happiness. In addition, due to the existence of per capita income effect, the sample was divided into four groups and two-dimensional analysis is also employed. Findings show that the effect of institutional quality on happiness is negative in countries with low per capita income and positive in others.