The relationship between happiness and income in the East African community
Date
2020
Authors
Karanu, Jeniffer Wairimu
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
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.
Description
Submitted in partial fulfilment of the requirements for the Degree of Financial Economics at Strathmore University