Asymmetric effects of democracy and macroeconomic factors on happiness under high and low per capita incomes: A threshold panel analysis

Employing various panel data analyses including threshold panel model, this paper has examined how economic status determines the relationship among democracy, macroeconomic variables and happiness. Considering panel data of 83 countries over the time period from 2010 to 2016, this study tries to establish that, factors determining subjective well-being (SWB) or life satisfaction has different effects differently for low and high income countries. This study has found that though per capita GDP has no direct impact on happiness, it establishes the role of other variables in determining happiness. It has been found that countries with higher level of income democratic quality and inflation have significant impact on happiness. The impact of democratic quality is positive whereas the impact is negative in case of inflation. Moreover, inequality and health expenditure per capita by the government respectively have negative and positive impact in case of low income countries. It is also evident that unemployment has a strict negative impact across all type of countries but the magnitude is higher in low income countries.