Happiness in Italy: An empirical Analysis

This paper provides empirical evidence on the determinants of happiness in Italy over the last 20 years. We investigate the correlation between happiness and several distinct socio-economic factors using individual data on Italian households obtained from the Survey on Household Income and Wealth. In addition to the usual demographic factors and income, we also consider the role of wealth and the comparison income effect. We find strong evidence of a North-South divide in happiness. In fact, our results indicate that in Southern Italy (i) males are happier than females and (ii) people are happier when their income is above the reference group income (and viceversa), i.e., there is a statistically significant symmetric comparison income effect. Further, we also study the role of additional dimensions of economic behavior, such as risk aversion and impatience, and the role of social factors, such as trust in people and interest in politics. We find that less risk-averse and less impatient individuals are happier than others and that greater trust in people and being interested in politics make people happier too.