The Determinants of Happiness: Some Migration Evidence

The economic and psychological literature on the determinants of happiness is notable for its inability to confirm a strong relation between material prosperity and happiness. In addition, the empirical work relies primarily on analysis of surveys. Another way to test the determinants of happiness is to investigate migration patterns between jurisdictions where conditions differ. This paper analyzes three different migration flows and finds that differences in material conditions are a prime motivator of the migration decision. To a lesser extent, so are environmental conditions. (JEL I31, D60) Introduction Can money buy happiness? If by money we mean a greater resource endowment to fund voluntary exchange, and if by happiness we mean utility, it is hard to imagine an orthodox neoclassical model that yields the answer "No." And yet there is an extensive literature that suggests that the determinants of human happiness are far more complex. Whether because of too much time spent earning labor income [Schor, 1991], the lack of correlation between measures of income such as per capita gross domestic product and the availability of particular goods generally considered basic necessities [Rodriguez and Rodrik, 2001], market failures that GFP by definition explicitly ignores [Daly and Cobb, 1989], or because people are more concerned with relative economic standing than absolute levels of consumption [Frank, 1999; Easterlin, 1995; Easterlin, 1974, Dusenberry, 1949], there are substantial reasons in the literature for doubting a strict relationship between material prosperity and human satisfaction.