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Climate Risks and Happiness: Evidence from the European Union

Author

Listed:
  • Abeeb Olaniran

    (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)

  • Talita Greyling

    (Centre for Well-being, Artificial Intelligence and Social Impact (C.WAIS) and School of Economics, University of Johannesburg, Johannesburg, South Africa)

  • Rangan Gupta

    (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)

  • Christian Pierdzioch

    (Department of Economics, Helmut Schmidt University, Hamburg, Germany)

Abstract

The European Union (EU) is one of the largest contributors to global greenhouse gas (GHG) emissions and is committed to being the first economic bloc to achieve a net-zero emissions balance. We examine the attendant implications of the shortfall of these emissions through climate-related risks on national well-being and happiness of selected countries that contribute the largest of the EU GHG emissions. We find strong evidence of a persistent diminishing effect of climate shocks on happiness, with physical-related shocks causing more havoc than transition-related shocks. Exploring the non-linear dynamics of these relationships, we find asymmetric effects of positive versus negative climate-related shocks, with positive shocks worse than negative in some countries, but inverted in others across both risk measures. Our findings offer valuable insights for governments and policymakers seeking to promote a socially just transition to a sustainable economy by highlighting the role of climate-related insurance as a key component of climate mitigation and adaptation strategies.

Suggested Citation

  • Abeeb Olaniran & Talita Greyling & Rangan Gupta & Christian Pierdzioch, 2026. "Climate Risks and Happiness: Evidence from the European Union," Working Papers 202621, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:202621
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    Keywords

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    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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