Macroeconomic Factors Affecting Happiness

This paper examines factors affecting happiness using panel data concerning 58 countries during 2003-2011. Happiness data come in the form of answers to questions such as How happy are you as a whole in your life? and the answers range from 1 to 5transformed to obtain a 1-10 scale. Macroeconomics data are from MIT and World Bank 2012 tables. Including 215 total pool observations indicate the negative and significant effect for Inflation and Unemployment while positive and significant for Growth of GDP Per Capita and the Government Expenditure. Controlling these variables Islamic countries are relatively less happy.