The paper attempts to empirically assess whether GDP per capita or the human capital index is a better measure of happiness.
Cross‐country regressions are run to see how GDP per capita fairs in comparison to the human capital index in explaining happiness based on survey questionnaires.
The paper finds that GDP per capita accounts for a far greater share of the cross country variation in happiness based on survey data than the human capita index and assorted other measures of human welfare.
The important implication is that the often heard criticism that GDP per capita is inappropriate for use in economic analysis, especially in the area of economic development and other international fields, because it is not specifically designed as a measure of welfare, may be unfounded.
The paper shows that GDP per capita is a better measure of happiness defined in surveys than the human capital index.
