Impact of Good Governance Quality and Income upon Happiness in Selected Countries

The change of theoretical base in the area of welfare economy and due to economic evolution along time, in recent decades happiness has been considered as an important index for measuring welfare in individual and social levels along with other initial proxies such as wealth, consumption, gross domestic production. This particularly has attracted many economists attention such that they investigate the impact of economic variables on happiness. Government is an unclear and effective factor over nations happiness. Because government functions in expanding happiness through two channels. Direct channel and indirect channel. Therefore, the impact of governance over happiness increase is significant. This study is using panel data for investigating the impact of governance over happiness. Six Kaufmann governance indices has been used for assessing 112 nations governance in time period of (2006-2019). These six indices have been divided into two sub-index technical quality and democratic quality and has been evaluated by three equations. Also the sample was divided in two groups and the impact of governance on happiness was studied carefully. Income variable along with two control variables government expenditures and misery index were added to the function. These study findings indicate that there is a positive relationship between increase in income, governance improvement and happiness expansion. The effectiveness of governance quality in parallel with increasing happiness is considerable to democracy quality. This result is confirmed in all poor and rich nations, and its impact on poor nations is more than the rich ones. Income has significant direct effect on expanding happiness. Income coefficients are positive in each 3 group and for the poor is greater than the rich. Two control variables government expenses and misery index in all countries have positive and negative relationship with happiness respectively. The existent relationship holds for rich nations, but the coefficient of government expenses for poor nations is negative. On this basis, it can be said that governments have a significant and undeniable role in promoting the level of happiness in society by improving the quality of governance and reducing the misery index in the economy. Also the significance of gross domestic production and economic growth should not be ignored.