Impact Assessment of Macroeconomic Indicators on Happiness Level

Abstract

This paper studies the effects of objective macroeconomic indicators on measures of subjective well-being. This issue is central to the economics of happiness as a modern academic research discipline. The article provides an econometric approach to identifying the impact of changes in macroeconomic indicators on the reported level of happiness. We used models on panel data for 163 countries for the period from 2005 to 2019. The results of modeling showed that GDP per capita has a significant positive effect while unemployment and inflation, a significant negative effect on happiness. Our quantitative results show that unemployment depresses the reported level of happiness more than inflation does. Our research complements a number of macroeconomic studies in the field of public and subjective well-being: it focuses on links between the reported level of happiness and GDP per capita and determines social and economic costs of unemployment and inflation. These studies are of particular importance in the context of digitalization of the economy and the negative consequences of the COVID-19 pandemic.