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“The statistical evidence from this study therefore suggests that as far as happiness is concerned, it is better to give than to receive aid.”


The World Database of Happiness, masterminded by Professor Ruut Veenhoven at Erasmus University in Rotterdam, provides the visitor with a vast searchable inventory of empirical findings on happiness, helpfully organized and cross-referenced.

However, the authors of a very concise paper published last April in the Atlantic Economic Journal (subscription required) have called attention to a shockingly neglected gap in the aforementioned scholarly literature: None of the existing studies has yet untangled the relationship between a state of insanely blissful delight and foreign aid.

B. Mak Arvin and Byron Lew of Trent University in Ontario, Canada, turn their attention first to donor countries, using happiness data from the World Database of Happiness and all other figures from the World Bank. Controlling for income, inflation and employment, they find happier countries give more aid: “the happiness coefficient is positive and statistically significant at the 5% level” and “a one-unit increase in happiness leads to an increase in the donor’s aid to GDP ratio…by 0.132 of a percent.” At the same time, “aid is a significantly positive determinant of a donor’s happiness.” There seems to be a virtuous circle between a 1.31217 standard deviation increase in the joy of giving and the parameterized, rigorously assessed impact on the act of giving.

Looking at recipient countries, the authors come to two conclusions: one predictable and one less so. First, controlling for income of recipient, donors are remarkably insensitive to the plight of the unhappy: “happiness has no statistically significant impact on the receipt of aid.” Second, “aid has no statistically significant influence on happiness, although income does.” Alas aid is not only ineffective in 15 other ways already covered by the literature, it also does not meet the goals of the country-owned, fully participatory Joylessness Reduction Strategy Paper.

Or doesn’t it? We were a little unclear on whether this paper was any more successful than other cross-country regressions that afflict the aid literature at resolving convincingly what causes what, whether the correlation is robust or was the result of data mining, and whether both happiness and aid are driven by some third factor, like cross-country differences in raw sex appeal.

It’s not easy being an aid researcher. In fact, we observe, anecdotally, that aid researchers are kind of unhappy….

(Thanks to reader Tomas for the tip.)

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  1. “cross country differences in raw sex appeal”. Best phrase ever used by Aid Watch. Congratulations.

    Posted December 4, 2009 at 3:26 am | Permalink
  2. wamy kufakwandi wrote:

    This study doesn’t surprise me at all, its common sense to not give back to a country or even people whom you might be unhappy with your efforts

    Posted December 4, 2009 at 10:29 am | Permalink
  3. David Zetland wrote:

    …except when they get published.

    Posted December 4, 2009 at 12:10 pm | Permalink
  4. kevin denny wrote:

    The words “shooting” “fish” “barrel” , and in a particular order, come to mind.
    If Aid is indeed, a waste of money, but it makes us rich folks feel good, then as good utilitarians, the policy recommendations are clear.

    Posted December 4, 2009 at 9:03 pm | Permalink
  5. David Roodman wrote:

    I bet the core result on the donor side is this: Scandinavia is Scandinavia. They’re happy and they give aid.

    Posted December 8, 2009 at 1:00 pm | Permalink
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    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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