The Geography of Economics and Happiness: Spatial Patterns in the Effects of Economic Conditions on Well-Being

This paper investigates the cross-country distribution of the relationship between economic conditions and well-being. Using a large sample of individuals from 94 countries worldwide, we find that the effect of income on well-being is larger in countries with lower GDP per capita, while the negative effect of being unemployed is stronger in countries with higher unemployment rate or higher GDP per capita. Interestingly, the effect of being unemployed displays positive spatial dependence across countries that is not accounted for by aggregate socio-economic conditions. Overall, the results indicate that geography, culture and institutions must be explicitly taken into account in order to understand the relationship between economic conditions and well-being.