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Abstract

Using annual data from 1961 to 2005 growth rate of gross domestic productat the constant prices of year 2000 is taken in the dependent variable andgrowth rates of employment level, gross fixed capital formation and lagdependent variable are all the explanatory variables, we obtained totalfactor productivity by using Cobb Douglas Model. The corresponding timeperiod’s data of three happiness indices – life satisfaction, ecologicalfootprint and life expectancy is taken to determine the effect of happinessindices on total factor productivity. Negative impact of ecological footprintindex on TFP is found in Canada, Japan, Norway, Spain, and UK, but isfound significant in the cases of Canada, Norway, Spain and UK. Lifeexpectancy is found to be significantly explaining TFP in Netherlands,Norway, Spain, UK and USA. As far as the subjective index of happiness –Life Satisfaction – is concerned the slope coefficient is insignificant in all thecases except the USA. Estimates from pooled regression show that growthrates of ecological footprint index and life expectancy both are significantlyexplaining TFP, but life satisfaction index is found to be insignificant.Endorsing Loria’s viewpoint there is not only a need to check nationalincome accounts but there is also a need to develop happier societies.Enhancing happiness – the intangible capital – could be helpful in explainingtotal factor productivity in the neoclassical growth model.