Does Good Governance Enhance Happiness: A Cross Nation Study

The purpose of this paper is to analyze the efficiency of the countries over the period of 10 years by applying data envelopment analysis (DEA). Based on rational and factual parameters such as freedom of press, freedom of religion, percentage of export in Gross Domestic Product (GDP), index of globalization, life expectancy at birth, gender ratio etc., this paper attempts to measure the efficiency of happiness. A combination of social and economic factors has been used to measure technical efficiency. The contribution of this paper is twofold. First, it measures the relative efficiency of all the countries included in the study. The nations have been ranked as per their relative efficiency and the peer group has been formed. Second a comparison between the rich and the poor countries have been done to test empirically whether the economic growth enhances the happiness among people. Presently, more than 3,000 studies have been published on happiness and Veenhoven in 2004 created a database called World Database of Happiness. The World Database of Happiness has attempted to present the available research findings on happiness. Part of the findings on happiness in nations is available in ‘States of nations’. For the research purpose, States of Nations and the data published by have been considered. Although happiness has been quantified and the existing literature has sufficient empirical evidences of the same, in the present context, the relative efficiency has been calculated for the countries on basis of objective and subjective happiness parameters. As per the literature, happiness has two aspects (1) objective and (2) subjective. Objective parameters are external to the individuals and covers material living parameters viz. GDP growth, income, nutrition, mortality rate, literacy etc. However, Subjective indicators measure the quality of life of the individuals. These are summarized as ‘‘subjective well-being’’. The various parameters considered in the study capture different aspects of happiness. The result shows how the government can increase the happiness of the people by analyzing the behavior and expectations. People express their preference explicitly about political parties, religion believes, law and order situation, trust in official institutions etc. Although, the behavior of people largely depends upon availability of goods and services in the market, the government can make budgets according to priority or preferences of people. Another way to increase happiness can be done by analyzing the peer group, which is an outcome of DEA. This shows the nations which are similar in terms of their economic and social conditions. The government can compare the prevailing conditions in different countries that improve the condition in their respective country. This could be an effective method as some of the parameters can be replicable in order to make people happier. The limitation of this study is lack of availability of data for many countries. As the number of countries increases, a change in the relative efficiency can be observed. Therefore, a future study can be conducted where the relevant data can be collected and a more global result can be obtained. Copyright Springer Science+Business Media Dordrecht 2014