IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v152y2025ics026499932500272x.html

Do country sustainability practices matter to happiness?

Author

Listed:
  • Chen, Pei-Fen
  • Chen, Mei-Ping

Abstract

This study pioneers a global, longitudinal analysis of how country-level ESG (environmental, social, and governance) metrics shape national happiness across 136 nations from 2006 to 2021. By examining both happiness and corruption perceptions as two opposite indicators, the research reveals that ESG impacts vary across income levels and quantiles, with low-income nations being less influenced, indicating that some infrastructures are more vital than ESG. Using quantile and panel threshold regression, the study uncovers asymmetric effects of ESG-related practices (e.g., land surface temperature, renewable energy output, internet, and access to electricity), and identifies nonlinear relationships—such as U-shaped and inverted U-shaped patterns—between ESG indices and happiness or corruption. These findings expose a “too-much-of-a-good-thing” phenomenon and reinforce the nuanced role of ESG in sustainable development.

Suggested Citation

  • Chen, Pei-Fen & Chen, Mei-Ping, 2025. "Do country sustainability practices matter to happiness?," Economic Modelling, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:ecmode:v:152:y:2025:i:c:s026499932500272x
    DOI: 10.1016/j.econmod.2025.107277
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S026499932500272X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2025.107277?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Ester Clementino & Richard Perkins, 2021. "How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy," Journal of Business Ethics, Springer, vol. 171(2), pages 379-397, June.
    2. Marc-Arthur Diaye & Sy-Hoa Ho & Rim Oueghlissi, 2022. "ESG performance and economic growth: a panel co-integration analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(1), pages 99-122, February.
    3. Li, Fan & Zhou, Tao, 2020. "Effects of objective and subjective environmental pollution on well-being in urban China: A structural equation model approach," Social Science & Medicine, Elsevier, vol. 249(C).
    4. Danisman, Gamze Ozturk & Tarazi, Amine, 2024. "ESG activity and bank lending during financial crises," Journal of Financial Stability, Elsevier, vol. 70(C).
    5. Jacek Rothert & Douglas VanDerwerken & Ethan White, 2020. "Socioeconomic factors and happiness: evidence from self-reported mental health data," Empirical Economics, Springer, vol. 58(6), pages 3101-3123, June.
    6. Lutfi Abdul Razak & Mansor H. Ibrahim & Adam Ng, 2023. "Environment, social and governance (ESG) performance and CDS spreads: the role of country sustainability," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 24(5), pages 585-613, July.
    7. Bukari, Chei & Seth, Suman & Yalonetkzy, Gaston, 2024. "Corruption can cause healthcare deprivation: Evidence from 29 sub-Saharan African countries," World Development, Elsevier, vol. 180(C).
    8. Rocío Redondo Alamillos & Frédéric de Mariz, 2022. "How Can European Regulation on ESG Impact Business Globally?," JRFM, MDPI, vol. 15(7), pages 1-19, June.
    9. DasGupta, Ranjan, 2022. "Financial performance shortfall, ESG controversies, and ESG performance: Evidence from firms around the world," Finance Research Letters, Elsevier, vol. 46(PB).
    10. Amore, Mario Daniele & Bennedsen, Morten, 2013. "The value of local political connections in a low-corruption environment," Journal of Financial Economics, Elsevier, vol. 110(2), pages 387-402.
    11. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
    12. Shin, Jiyoung & Moon, Jon Jungbien & Kang, Jingoo, 2023. "Where does ESG pay? The role of national culture in moderating the relationship between ESG performance and financial performance," International Business Review, Elsevier, vol. 32(3).
    13. Broadstock, David C. & Chan, Kalok & Cheng, Louis T.W. & Wang, Xiaowei, 2021. "The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China," Finance Research Letters, Elsevier, vol. 38(C).
    14. Wang, Kai & Chen, Xi & Wang, Chenye, 2023. "The impact of sustainable development planning in resource-based cities on corporate ESG–Evidence from China," Energy Economics, Elsevier, vol. 127(PA).
    15. Van Ha, Le, 2024. "Unveiling a novel approach to corruption measurement: Leveraging household survey data on income and expenditure through forensic analysis," Economic Modelling, Elsevier, vol. 136(C).
    16. Alnafrah, Ibrahim & Belyaeva, Zhanna, 2024. "The nonlinear road to happiness: Making sense of ESGD impacts on well-being," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 365-381.
    17. Zhang, Yutian & He, Yu, 2024. "How does the green financial system affect environmentally friendly firms' ESG? Evidence from Chinese stock markets," Energy Economics, Elsevier, vol. 130(C).
    18. Budsaratragoon, Pornanong & Jitmaneeroj, Boonlert, 2020. "A critique on the Corruption Perceptions Index: An interdisciplinary approach," Socio-Economic Planning Sciences, Elsevier, vol. 70(C).
    19. Beckmann, Joscha & Rogmann, Jennifer, 2024. "Determinants and effects of country ESG controversy," Energy Economics, Elsevier, vol. 131(C).
    20. Khanh Hoang, 2022. "Silent but deadly: Political corruption and voluntary ESG disclosure in the United States," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2775-2793, October.
    21. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    22. Otchere, Isaac & Abdulrahman, Adam & Wang, Jun, 2025. "Environmental, social, and governance investing and sustainability of pension funds: Evidence from the organisation for economic cooperation and development countries," Economic Modelling, Elsevier, vol. 143(C).
    23. Oren Mooneeapen & Subhash Abhayawansa & Naushad Mamode Khan, 2022. "The influence of the country governance environment on corporate environmental, social and governance (ESG) performance," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 13(4), pages 953-985, May.
    24. Johnson, Simon & Mitton, Todd, 2003. "Cronyism and capital controls: evidence from Malaysia," Journal of Financial Economics, Elsevier, vol. 67(2), pages 351-382, February.
    25. Ahmadova, Gozal & Delgado-Márquez, Blanca L. & Pedauga, Luis E. & Leyva-de la Hiz, Dante I., 2022. "Too good to be true: The inverted U-shaped relationship between home-country digitalization and environmental performance," Ecological Economics, Elsevier, vol. 196(C).
    26. Luca Zanin, 2022. "Estimating the effects of ESG scores on corporate credit ratings using multivariate ordinal logit regression," Empirical Economics, Springer, vol. 62(6), pages 3087-3118, June.
    27. Niranjan Chipalkatti & Quan Vu Le & Meenakshi Rishi, 2021. "Sustainability and Society: Do Environmental, Social, and Governance Factors Matter for Foreign Direct Investment?," Energies, MDPI, vol. 14(19), pages 1-18, September.
    28. Chevapatrakul, Thanaset, 2015. "Monetary environments and stock returns: International evidence based on the quantile regression technique," International Review of Financial Analysis, Elsevier, vol. 38(C), pages 83-108.
    29. Baker, Edward D. & Boulton, Thomas J. & Braga-Alves, Marcus V. & Morey, Matthew R., 2021. "ESG government risk and international IPO underpricing," Journal of Corporate Finance, Elsevier, vol. 67(C).
    30. Ping‐Chuan Jiang & Gen‐Fu Feng & Hai‐Jie Wang & Chun‐Ping Chang, 2024. "CSR from different perspectives: The global ESG indexes updated," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4694-4714, September.
    31. Malik, Mahfuja & Mamun, Khawaja & Osman, Syed Muhammad Ishraque, 2025. "Does corruption control enhance ESG-induced firm value? Insights from machine learning analysis," Finance Research Letters, Elsevier, vol. 72(C).
    32. Kyle S. Herman, 2023. "Green growth and innovation in the Global South: a systematic literature review," Innovation and Development, Taylor & Francis Journals, vol. 13(1), pages 43-69, January.
    33. Lemuel Kenneth David & Jianling Wang & Victor David Jr., 2024. "Economic and Governance Dimensions of ESG Performance: A Comparative Study in the Developing and European Countries," Journal of Developing Areas, Tennessee State University, College of Business, vol. 58(4), pages 221-240, October–D.
    34. Bukari, Chei & Seth, Suman & Yalonetkzy, Gaston, 2024. "Corruption can cause healthcare deprivation: evidence from 29 sub-Saharan African countries," LSE Research Online Documents on Economics 122806, London School of Economics and Political Science, LSE Library.
    35. Martin Binder & Alex Coad, 2015. "Heterogeneity in the Relationship Between Unemployment and Subjective Wellbeing: A Quantile Approach," Economica, London School of Economics and Political Science, vol. 82(328), pages 865-891, October.
    36. Guangyou Zhou & Lian Liu & Sumei Luo, 2022. "Sustainable development, ESG performance and company market value: Mediating effect of financial performance," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3371-3387, November.
    37. Rouine, Ibtissem & Ammari, Aymen & Bruna, Maria Giuseppina, 2022. "Nonlinear impacts of CSR performance on firm risk: New evidence using a panel smooth threshold regression," Finance Research Letters, Elsevier, vol. 47(PB).
    38. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    39. Hussain Muhammad & Stefania Migliori, 2023. "Board gender diversity and firm risk-taking: the moderating role of board size," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 15(3), pages 346-371.
    40. Shu, Hao & Tan, Weiqiang, 2023. "Does carbon control policy risk affect corporate ESG performance?," Economic Modelling, Elsevier, vol. 120(C).
    41. Paniagua, Jordi & Peiró-Palomino, Jesús & Santana-Gallego, María, 2022. "Does happiness drive tourism decisions?," Economic Modelling, Elsevier, vol. 111(C).
    42. Bagh, Tanveer & Zhou, Bingjun & Alawi, Suha Mahmoud & Azam, Rauf I, 2024. "ESG resilience: Exploring the non-linear effects of ESG performance on firms sustainable growth," Research in International Business and Finance, Elsevier, vol. 70(PA).
    43. Monica Singhania & Neha Saini, 2023. "Institutional framework of ESG disclosures: comparative analysis of developed and developing countries," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 13(1), pages 516-559, January.
    44. Oren Mooneeapen & Subhash Abhayawansa & Naushad Mamode Khan, 2022. "The influence of the country governance environment on corporate environmental, social and governance (ESG) performance," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 13(4), pages 953-985, May.
    45. Ganlin Pu, 2023. "A non-linear assessment of ESG and firm performance relationship: evidence from China," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(1), pages 2113336-211, March.
    46. Galletta, Simona & Goodell, John W. & Mazzù, Sebastiano & Paltrinieri, Andrea, 2023. "Bank reputation and operational risk: The impact of ESG," Finance Research Letters, Elsevier, vol. 51(C).
    47. Zahra Fotourehchi, 2021. "Sustainable development and happiness," International Journal of Happiness and Development, Inderscience Enterprises Ltd, vol. 6(3), pages 306-324.
    48. Wang, Wenna & Yang, Zhen & Chen, Jin & Liu, Jingjiang, 2025. "How does ESG affect government procurement in countries where ESG systems are established from the top down?," Economic Modelling, Elsevier, vol. 146(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hao, Xiaoli & Sun, Qingyu & Li, Ke & Li, Peilun & Wu, Haitao, 2024. "Does environmental decentralisation improve ESG performance? Evidence from listed companies in China," Energy Economics, Elsevier, vol. 139(C).
    2. Feng, Ruonan & Ma, Lu & Wu, Dan, 2025. "ESG performance and corporate innovation under the moderating effect of firm size," International Review of Economics & Finance, Elsevier, vol. 97(C).
    3. Zhang, Sheng & Yang, Yifu & Zhao, Yijie & Wang, Ya & Hao, Jiming, 2025. "ESG in Dynamic Stochastic General Equilibrium (DSGE): Driving Forces for SDGs," Structural Change and Economic Dynamics, Elsevier, vol. 75(C), pages 301-312.
    4. Xue, Qinyuan & Jin, Yifei & Zhang, Cheng, 2024. "ESG rating results and corporate total factor productivity," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    5. Syed Shoaib Nazir & Taimur Ashiq & Mazhar Farid Chishti & Riffat Ullah & Athar Marwat, 2024. "Assessing Financial Stability through ESG: The Impact of Sustainable Finance on Commercial Banks listed in Pakistan Stock Exchange (PSX)," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(3), pages 120-129.
    6. Qi, Meng & Fang, Wenjing, 2025. "ESG global trends: A comparative analysis of China and the international community," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 2330-2345.
    7. Peng, Shengnan & Liu, Chan & Wang, Ze & Ye, Zihan & Sun, Xialing & Tan, Zhanglu, 2024. "The impact of the carbon reduction policy effectiveness on energy companies' ESG performance," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    8. Mohapatra, Swati & Kumar, Ashish & Mohapatra, Malaya Ranjan & Srivastava, Vikas, 2025. "Does CEO duality moderate environmental, social, and governance performance-earnings management relationship? Evidence from emerging markets," Finance Research Letters, Elsevier, vol. 73(C).
    9. Haoming Ding & Zerui Wang, 2025. "The Influence of Institutional Pressures on Environmental, Social, and Governance Responsibility Fulfillment: Insights from Chinese Listed Firms," Sustainability, MDPI, vol. 17(9), pages 1-13, April.
    10. Huang, Xinyue & Ren, Yuning & Ren, Xiangru, 2024. "Legal background executives, corporate governance and corporate ESG performance," Finance Research Letters, Elsevier, vol. 69(PB).
    11. Chengjie Huang & Hang Zhou & Wan Ahmad Norhayati & Ram Al Jaffri Saad & Xinrui Zhang, 2024. "Tax incentives, common institutional ownership, and corporate ESG performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2516-2528, June.
    12. Liao, Qinghu & Erzurumlu, Yaman Omer & Gozgor, Giray, 2025. "Impact of market regulations on firm-specific esg performance: evidence from asian economies," Research in International Business and Finance, Elsevier, vol. 76(C).
    13. Caterina Lucarelli & Sabrina Severini, 2024. "Anatomy of the chimera: Environmental, Social, and Governance ratings beyond the myth," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4198-4217, July.
    14. Bagh, Tanveer & Zhou, Bingjun & Alawi, Suha Mahmoud & Azam, Rauf I, 2024. "ESG resilience: Exploring the non-linear effects of ESG performance on firms sustainable growth," Research in International Business and Finance, Elsevier, vol. 70(PA).
    15. Malik, Mahfuja & Mamun, Khawaja & Osman, Syed Muhammad Ishraque, 2025. "Does corruption control enhance ESG-induced firm value? Insights from machine learning analysis," Finance Research Letters, Elsevier, vol. 72(C).
    16. Lihua Ma & Xiuling Yuan & Jingyi Lu & Yifan Li & Weiqi Gao & Huizhe Yan & Xuedong Zhang, 2024. "The ESG performance influence mechanism analysis-based on empirical analysis," PLOS ONE, Public Library of Science, vol. 19(5), pages 1-21, May.
    17. Ding, Liuqi & Cui, Zixuan & Li, Jiali, 2024. "Risk management and corporate ESG performance: The mediating effect of financial performance," Finance Research Letters, Elsevier, vol. 69(PB).
    18. Ali, Shoaib & Al-Nassar, Nassar S. & Sindhu, Muzammal Ilyas & Naveed, Muhammad, 2025. "Sustainable synergy: Static and dynamic nexus between ESG and BRICS equity markets," Research in International Business and Finance, Elsevier, vol. 74(C).
    19. Wang, Kai & Chen, Xi & Wang, Chenye, 2023. "The impact of sustainable development planning in resource-based cities on corporate ESG–Evidence from China," Energy Economics, Elsevier, vol. 127(PA).
    20. Chao Wang & Jiapeng Li & Yang Yi & Shuwang Yang, 2024. "Crowding in or crowding out? Executive environmental attention and ESG performance of mining listed companies," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 37(4), pages 897-913, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:152:y:2025:i:c:s026499932500272x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.