This paper examines the determinants of happiness index ratings in European countries over 8 time points using unique data from the Eurostat, World Bank and World Happiness Reports.
To examine the determinants of happiness index ratings for EU-27 countries over the period 2012–2019, panel ordinary least square and quantile regression model are used to data obtained from all sample.
Evidence from European data on happiness index generate some important key outcomes; economic outcomes levels with both current taxes and inflation rate have a positively relationship on happiness index ratings (HIR), while total employment rate has a significant negativity on HIR. Additionally, in a quantile panel regression of 27 countries, the impact of financial inclusion on happiness index looks to change with a country's level of income. On the macroeconomic level, gross domestic product (GDP) improves the happiness index for the individual under certain conditions. Thus, GDP on 0.25th quantile levels positively and significantly impacts the HIR for leader countries.
Empirical evidence suggests that macro-economic variables and the labor market proxies of the countries play a key role in determining HIR as well.
The study extends the literature on developed countries and suggestions a particular perspective on the relationship between economic outcomes and happiness index. This study offers two main originalities: it simultaneously examines the “happiness-macroeconomic level” and “happiness-employment status dimension”, and it uses a quantile regression approach, including financial inclusion variation.
