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with a style of living in the big cities they cannot achieve and this creates frustration with
one’s own income situation.
Another insufficiently studied relationship is the one between religion, frequency of church
visits and happiness. The indicator religion differentiates between persons of different beliefs.
Frequency of church visits can be interpreted as an indicator for the seriousness of exercising
this belief. Swinyard et al. (2000) find that religious people are happier in both the US and
Singapore. For Eastern Europe we cannot detect differences across religions conditional on
the other variables in the model. So belonging to a particular religion does not yield happiness
per se after controlling for country specific effects. However, this result crucially depends on
controlling for country fixed effects. Excluding country dummies leads to a highly significant
negative effect of being Orthodox. Controlling for Bulgaria and Romania alone is sufficient to
render the variable insignificant. Based on our analysis, we therefore cannot exclude that the
cross-country variation in happiness is partly driven by differences in religion. Including the
share of Orthodox (as based on our sample data) in equation (1), we get the following result
(R2 = 0.77):
(2) Happiness = 2.59 + 0.015 (GDP per capita/1000) - 0.060 (Unemployment rate in %)
(0.22) (0.043) (0.027)
- 0.004 (Share of Orthodox in %)
(0.002)
The share of Orthodox in a country shows a negative sign and has a p-value of 0.20, while the
p-values of GDP per capita and unemployment are 0.75 and 0.11 respectively. Excluding
GDP per capita leads to equation (3) with R2 = 0.77.
(3) Happiness = 2.64 - 0.063 (Unemployment rate in %) - 0.004 (Share of Orthodox in %)
(0.15) (0.024) (0.002)
Now the unemployment rate and the share of Orthodox are both significant at a 10% level.
Orthodox explains approximately the same variance as GDP per capita and more. Thus, we
cannot reject the hypothesis that religion helps to explain variations in happiness across
countries. However, since we do not know whether religion is just proxying for some other