Considering Happiness for Economic Development : Determinants of Happiness in Indonesia

Happiness is often ignored in development economics even though it is generally considered the ultimate goal in life. Using the Indonesia Family Life Survey, this paper elucidates factors related to happiness in Indonesia in an ordered probit analysis. Some factors yield results consistent with those in the literature, but other factors such as unemployment and female gender turn out to be not robust. Exogenous measures are introduced for past income mobility, social trust, and political environment. Also, measures with a more immediate impact on happiness are exploited for social trust and political environment. The sign of the coefficient on past income mobility is reversed once the variable is purged of endogeneity. Also, social trust and political environment are found to have little relationship with happiness. The last finding stands in stark contrast to the findings in the literature that uses measures only remotely related to happiness