Does Happiness Affect the Bilateral Aid Flows Between Donor and Recipient Countries?

Abstract

The literature on the economics of well-being and happiness is currently growing at a remarkable rate. In separate studies, happiness has been linked to income, health, age, political and economic freedom, unemployment, inflation, self-employment, voluntary work, marriage, and even watching television. None of these studies have linked happiness to foreign aid disbursements. Using data from the Organisation for Economic Co-operation and Development, the World Bank and the World Database of Happiness, we construct an empirical model of aid, in which a host of donor interest and recipient need motives impact on the level of assistance a donor country gives. However, unlike other studies of aid, we concentrate on three factors in donor aid disbursement: the degree of happiness of the donor and the recipient; geographical proximity between the two countries; and competition between donors in providing aid. Using a number of different specifications, we test, in particular, the validity of the hypothesis that donor and recipient happiness are important determinants of levels of aid.La litte´rature sur l'e´conomie du bien-eˆtre s'accroıˆt a`une vitesse remarquable. Diffe´rentes e´tudes ont montre´le lien entre le bonheur et les revenus, la sante´, l'aˆge, la liberte´e´conomique et politique, le choˆmage, l'inflation, le travail inde´pendant, le be´ne´volat, le mariage et meˆme l'acte de regarder la te´le´vision. Aucune de ces e´tudes n'a fait le lien entre le bonheur et les de´penses d'aides a`l'e´tranger. À partir de donne´es provenant de l'OCDE, de la Banque Mondiale et de la Base de Donne´es Mondiales sur le Bonheur, nous de´veloppons un mode`le empirique d'aide dans lequel un grand nombre de motivations relatives aux inte´reˆts des pays donateurs et aux besoins des pays receveurs ont un impact sur le niveau d'aide fournie par le pays donateur. Cependant, contrairement a`d'autres e´tudes sur l'aide, nous nous concentrons sur trois facteurs influenc¸ant les de´penses d'aide re´alise´es par les pays donateurs: le degre´de bonheur du pays donateur et du pays be´ne´ficiaire, la proximiteǵ e´ographique des deux pays, la concurrence a`laquelle se livrent les donateurs pour fournir l'aide. En mobilisant un ensemble de spe´cifications, nous testons notamment la validite´de l'hypothe`se selon laquelle le bonheur du pays donateur et celui du be´ne´ficiaire sont d'importants de´terminants du niveau d'aide.

Reinventing Foreign Aid for Inclusive and Sustainable Development: Kuznets, Piketty and the Great Policy Reversal

“…According to the narrative, poor countries value development aspects like happiness more. This is broadly consistent with an evolving stream of the literature on happiness and wellbeing in the economics of development assistance (Arvin and Lew, , b, , , b).…”

Why don’t donor countries coordinate their aid? A case study of European donors in Morocco

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Foreign aid volatility and lifelong learning

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