Impact of innovation on happiness

Sharon Hadad

International Journal of Happiness and Development, 2026, vol. 10, issue 3, 279-296

Abstract: This study examines the relation between national innovation and national happiness using cross-sectional data from 127 countries. Innovation is measured by the Innovation Output Sub-Index from the Global Innovation Index, whereas happiness is proxied by the Ladder Score in the 2024 World Happiness Report. To address potential endogeneity, we apply two-stage least squares estimation, using the Innovation Input Sub-Index as an instrument. The results suggest that innovation has a significant positive effect on happiness, particularly in countries with lower gross domestic product (GDP) per capita. However, the marginal benefit declines as income rises, becoming negligible or even negative beyond a GDP per capita of approximately USD 62,500. These findings suggest that innovation's impact on national happiness varies systematically with economic development, with stronger effects observed in lower-income countries. This study contributes to the economics of happiness by identifying income-based heterogeneity in the innovation-happiness link and offering relevant policy insights.

Keywords: innovation; happiness; subjective well-being; SWB; life satisfaction; economics of happiness; endogeneity; instrumental variables; two-stage least squares; 2SLS; GDP per capita; gross domestic product per capita; income inequality; Easterlin Paradox; Global Innovation Index; GII; economic development. (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijhdev:v:10:y:2026:i:3:p:279-296

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