The relationship between happiness and income in the East African community

Abstract

This study aims at determining the impact of income on happiness in the East African Community (EAC). Happiness is measured on a ladder from 0 to 10 where 0 is vety unhappy and 10 is vety happy while income is measured by the log of GDP per capita. This study uses a Panel Data approach which covers four EAC member countries; Kenya, Uganda, Tanzania and Rwanda from the period 2006 to 2018. The Random Effects model is used to estimate this relationship and it was found that at the 99% confidence level, there is a statistically significant positive relationship between income and happiness. It would therefore be impottant for policy makers to ensure individuals have a decent income so they can meet their basic needs and improve their happiness. Similarly, life expectancy was found to have a negative relationship with happiness, holding all else constant, implying the need for quality healthcare. At the 95% confidence level, social suppott was found to have a statistically significant positive relationship with happiness, holding all else constant. This emphasizes the need for a strong support system through family and friends. Unemployment was also found to have a statistically significant positive relationship with happiness at the 90% confidence level, holding all else constant. Employers should therefore improve working conditions so that people can enjoy working rather than being unhappy when employed. This study encourages further research into other detem1inants of happiness in the EAC as well as the reasons for low happiness levels.