Religiosity as a Determinant of Happiness


  • For comments and suggestions on earlier versions we are grateful to seminar participants at the ISNE 2010 Conference in Dublin, the SSE Annual Meeting 2011 in Houston, the Market and Happiness Conference 2011 in Milan, and the Annual Meeting of the Research Committee on Development Economics 2011 in Berlin, and to Michael Funke, Olaf Hübler, Bernd Lucke, Martin Paldam, Ulrich Schmidt, Holger Strulik, and an anonymous referee.

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The empirical relation between happiness and religiosity is considered from the perspective of basic utility theory. An unbalanced cross-country panel data set is used to study whether religiosity can be considered as a substitute in the happiness function, which itself is held to be a proxy for the utility function. We find that the same level of happiness can be maintained with high and low levels of religiosity as a result of substitution along a standard indifference curve. Our empirical results are consistent with three stylized facts of the empirical literature, namely a positive correlation between happiness and religiosity, a positive correlation between happiness and income, and a negative correlation between religiosity and income.