Macroeconomic Factors Affecting Happiness: Panel Data Analysis in OECD Countries

Abstract

The objective of this study is to investigate the impact of fundamental macroeconomic
determinants on happiness levels in OECD member countries. A panel data set of 38 countries
covering the 2014-2023 period was analyzed. The Cantril ladder score was used as the dependent variable. The random effects model was selected based on Hausman and Breusch-Pagan tests; following diagnostic tests, the Driscoll-Kraay robust estimator was applied against deviations. The findings indicate that unemployment, interest rate, exchange rate, and net budget deficit have a statistically significant and negative impact on happiness, while the Human Development Index has a positive impact. The effect of the export ratio was found to be insignificant. The results confirm that labor market stability, low borrowing costs, and human development play a critical role in subjective well-being. It is recommended that policymakers adopt holistic macroeconomic policies prioritizing employment, purchasing power, and structural welfare overgrowth-oriented targets.