Determinants of Happiness in the U.S.A: an empirical study with longitudinal data

Author

Ling Zhang, Southern Illinois University CarbondaleFollow

Date of Award

5-1-2022

Degree Name

Doctor of Philosophy

Department

Economics

First Advisor

Sajal, Lahiri

Abstract

In this study, we intend to analyze the factors that influence happiness from an eco- nomics perspective, In the first chapter, we will look at the Easterlin’s paradox, which states that at a point in time, individuals with more wealth are happier on average than those with less. Despite significant income increases, the average happiness of a cohort remains stable across the life cycle. Applying panel data set from the Panel Study of Income Dynamics (PSID) and a Fixed Effect Ordered Logit estimating methodology, we discovered that a greater income improves people’s happiness even across the life cycle. For chapter 2, we will analyze how does trade openness in United State at state level affect the happiness of people working in different sectors, such as manufacturing sector and service sector. Merging the individual level microdata from PSID with the macro level state trade openness data in United State, and applying the Ordered-Logit and the multinomial- Logit methods, we find that people living in states more open to international trade are happier. Moreover, people working in service sector are happier with a higher trade openness level than those working in other sectors. In Chapter 3, we examined at how happiness affects people’s environmental donating be- havior. Using PSID data and the Probit, Tobit, and Heckman two-stap selection techniques, we study the influence of happiness on whether people make an environmental contribution and the amount of environmental contribution they donated. We have used instrumental variable to control the endogeneity caused by the causal effect. According to the results, happy people are more likely to donate and donate more money to environmental charity.