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Cognitive Ability and Economic Growth: How Much Happiness is Optimal?
Principal Investigator(s): View help for Principal Investigator(s) Nik Ahmad Sufian Burhan, Faculty of Human Ecology, Universiti Putra Malaysia
Version: View help for Version V1
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Project Citation:
Burhan, Nik Ahmad Sufian. Cognitive Ability and Economic Growth: How Much Happiness is Optimal? Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-03-09. https://doi.org/10.3886/E134481V1
Project Description
Summary:
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The Savanna-IQ Interaction Hypothesis theorised
that people with higher intelligence or cognitive ability (CA) are associated
with creating and adapting modern, evolutionarily novel values and preferences.
Globally, cognitively competent societies are more innovative and competitive,
enabling them to generate higher productivity and prosperity in their
countries. However, does happiness facilitate the societies in enhancing the
effect of CA on economic growth? Hence, this study treated happiness as a
positive psychological state and intrinsic motivator that encourages labourers
to fully utilise their CA and produce higher productivity for the economy.
Nevertheless, regression analyses using two different measures of CA revealed
strong evidence that both CAs interacted negatively with happiness while
generating economic growth in 1960−2017. These contradicting findings were
robust after controlling for the endogeneity bias (i.e., reverse causality)
using instrumental variable (IV) estimations for CAs and happiness, besides
weighting the countries by their population sizes. Furthermore, the threshold
regression analyses demonstrated significant evidence that the relationships
between the CAs and growth were greater in less happy societies than happier
ones. In this case, the impacts of CA had declined significantly beyond the
threshold value of 6.34 − 6.49 (p<.05) based on the happiness scale
of 0 – 10. To summarise, pursuing rapid and incessant productivity growth
requires an optimal level of happiness, where a little amount of ‘emotional
distress’ postulated by the evolutionary concept could inspire and drive humans
to exploit their cognitive capital and generate high economic growth over the
decades.
Funding Sources:
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Universiti Putra Malaysia (GP-IPM 9561600)
Scope of Project
Subject Terms:
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happiness;
economic growth;
cognitive ability
Geographic Coverage:
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cross-country
Data Type(s):
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aggregate data
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