Thesis Public Defense | VNP26 - Nguyễn Thị Xuân Thắm

A study of happiness and institutional quality: international evidence

Student: Nguyễn Thị Xuân Thắm, VNP26

Supervisor: Dr. Hồ Quốc Thông

Abstract:

Human happiness is a topic that always attracts researchers’ attention because happiness in life is considered an ultimate goal for individuals. Additionally, the role of institutional quality in enhancing life satisfaction is especially concerned in recent years. To clarify that effect, this study investigates the association between institutional quality and happiness for worldwide countries in the period from 2013 to 2020. The analysis utilizes unbalanced panel data from 204 countries with 1,615 observations which are mainly taken from World Development Indicators and Worldwide Governance Indicators. Besides the Ordinary Least Square method, Simultaneous Equations Model estimation is also employed with instrumental variables to deal with the possible endogeneity problem between happiness and institutional quality. For OLS estimation, the results show that the government effectiveness and corruption control have positive impacts on happiness, while political stability negatively affects happiness. However, when applying the SIM method, the findings evidence all indicators of institutional quality play important roles in improving happiness. Furthermore, the validity of press freedom as an instrumental variable employed in the model is just shown in several cases, as this instrument is weakly associated with institutional quality. Finally, a negative association between the unemployment rate and happiness shows that joblessness makes individuals less satisfied with their life than those with higher employment rates. This study yields the policy implications that indicate government needs to concentrate on enhancing various dimensions of institutional quality to raise the level of residents’ happiness. Moreover, the government needs to have more strategies to reduce the unemployment rate and support jobless employees to overcome the difficult time.

JEL Classification: I31, H10
Keywords: institutional quality, happiness, quality of life, instrument, press freedom