Happiness and Globalization: A Spatial Econometric Approach

Based on the data of Gallup World Poll Survey (GWP), this study employs a spatial 2SLS (two stage least square) model to examines the impact of globalization on the level of happiness across 145 nations. We observe endogeneity of the spatial lag term (Wh) on happiness as well as spatial dependencies in the independent variables (WX’s) which represents indirect effects from a change in X’s in the neighboring regions. We observe contrasting spillover effects (own v/s neighboring effect) of the same explanatory variable generating positive or negative effect, respectively, across space. Further, an inverted ‘U’ Kuznet curve reveals a non-linear relationship between average happiness and happiness inequality. At low levels, an increase in well-being appears to hurt the poor; but beyond a certain threshold, it seems to reduce inequality. We observed among countries that happiness inequalities for developed regions are more when compared to developing regions.