"Happiness in Life Domains: Evidence from Bangladesh Based on Parametric and Non-Parametric Models"

Mahmud, Minhaj and Yasuyuki Sawada

August 2015

This paper applies a two layer approach to explain overall happiness both as a function of happiness in different life-domains and conventional explanatory variables such as income, education and health etc. Then it tests the happiness-income relationship in different happiness domains. Overall, the results suggest that income explains a large part of the variation in total happiness and that income is closely related with domain-specific happiness, even with non-economic domains. This is also consistent with a hypothesis that income and happiness will move hand in hand in developing countries, suggesting that income is a good summary measure of well-being and welfare for low income societies. Yet, the nonparametric estimation confirms the concavity of happiness function in economic domain, which is consistent with Easterlin paradox.