Happiness is a subjective feeling that has been regarded as one of the fundamental goals of human life since the time of Aristotle. Since sustainable happiness and sustainable development are considered two sides of the same coin, if an increase in happiness is assumed to depend on economic growth and natural resources are considered key factors in this process, it can be argued that achieving happiness is closely linked to economic growth and the effective utilization of natural resources. Accordingly, the present study examines the relationship between the resource curse and economic growth within the framework of the Happiness Kuznets Curve in 66 developing countries. To analyze this relationship, both the random effects model and threshold regression method were employed. The results of the random effects model indicate that economic growth has a positive and significant effect on happiness, while its square has a negative and significant coefficient, reflecting a nonlinear relationship between income and happiness. Subsequently, by determining a threshold for the share of natural resource rents in GDP, countries were divided into two groups. The findings show that in the first regime, natural resources have a positive and significant effect on happiness, but after exceeding the threshold, this effect becomes negative and significant. This reversal indicates the occurrence of the resource curse, which can reduce happiness through channels such as corruption, weakened governance, and inequality. Consequently, the policy recommendation of this study, which may be relevant for the countries under investigation, is to diversify the economy, improve governance, and pay special attention to the human development index and its relationship with quality of life in order to enhance happiness.


Introduction

Happiness is a mental and emotional feeling that has always been a fundamental goal for humans. According to existing studies, individuals with higher levels of happiness tend to have greater productivity, job performance, success, and health. Accordingly, happiness plays a crucial role not only in shaping personality but also in maintaining mental well-being and coping with the challenges of contemporary life. Given that promoting mental health has become a major social priority, and that mental health is a key component of human capital influencing economic growth through various channels, attention to this issue is increasingly necessary. Moreover, the role of gross domestic product in human well-being and the direct positive relationship between happiness and income indicate that economic growth and increased national income can enhance people’s satisfaction and happiness. The importance of this issue has reached a level where many countries today integrate sustainable happiness with sustainable development, viewing it as a gateway to achieving sustainability and even as a measure for assessing the level of development. Therefore, high income and economic development are considered among the main factors contributing to happiness in societies. This perspective also has deep roots in the history of economic thought. Since the emergence of economics as a discipline by Adam Smith, economic theories have been grounded in the concept of happiness, as he argued that higher income leads to greater satisfaction and well-being. From this viewpoint, if happiness is regarded as an outcome of economic growth, and economic growth is dependent on a country’s resources and productive capacities, it follows that many factors influencing happiness are rooted in economic growth. While numerous factors affect economic growth, energy and natural resources play an undeniable role. However, many resource-rich countries have fallen into what is known as the “resource curse.” Due to overreliance on natural resources, these countries often experience low economic growth, which can adversely affect their citizens’ well-being and happiness. Therefore, examining happiness in countries with abundant natural resources becomes particularly important.

Materials and methods
This study aims to examine the factors influencing happiness in a dynamic manner, using available data for 66 developing countries over the period 2010-20221, employing the generalized method of moments (GMM) with fixed effects as well as threshold regression. In this study, the fixed-effects GMM model is applied to control for country-specific characteristics and the endogeneity among variables. Since happiness is influenced by dynamic factors such as per capita income, unemployment, and corruption control, using the GMM model allows for a more precise causal analysis and prevents bias in the estimates. In contrast, the threshold model is employed to analyze the nonlinear effect of natural resources on happiness. The research hypothesis is based on the existence of a critical level of resource rents, beyond which the effect of natural resources shifts from positive to negative. The threshold model enables countries to be divided into two regimes according to their dependence on natural resources, allowing the distinct effects in each regime to be analyzed. This approach is particularly suitable for empirically testing the “resource curse” hypothesis. Therefore, the combination of these two models allows, on the one hand, controlling for data dynamics and cross-country heterogeneity, and on the other hand, accurately examining the nonlinear and threshold effects of natural resources on the formation of happiness.

Results and discussion
Based on the results of the random-effects model, the per capita GDP variable has a positive and significant impact on the happiness index. This finding indicates that, at the baseline level, economic growth contributes to an improvement in happiness in developing countries. However, the squared term of per capita GDP shows a negative and significant coefficient (-0.107), reflecting a nonlinear relationship between income and happiness. In other words, these results suggest the presence of a Kuznets curve for happiness in the countries under study. This inverted U-shaped relationship, as illustrated in the figure below, indicates that beyond a certain income level, further increases in income may be associated with a decline in subjective well-being and happiness. The results also show that the unemployment rate has a negative and significant effect on happiness (coefficient = -0.019), which aligns with economic theory and previous studies. This implies that unemployment, due to its adverse impact on happiness, can have substantial psychological and social consequences, ultimately reducing overall well-being. Contrary to expectations, life expectancy exhibits a negative and significant coefficient (-0.692), which may be due to interactions with other variables such as income or health quality. On the other hand, consistent with expectations, the corruption control variable (LCOR) has a positive and significant effect on happiness (coefficient = 0.095), indicating that improvements in institutional quality and reductions in corruption generally enhance social trust and life satisfaction. In the second part of the empirical analysis, a threshold test was conducted for the natural resource rent variable. The estimated threshold value is 6.92% of natural resource rents relative to GDP. This suggests that in countries where the share of natural resource rents is below this threshold, the utilization of natural resources through income growth, job creation, or infrastructure development can positively contribute to happiness. However, when natural resource rents exceed this critical level, their impact on happiness turns negative, reflecting the adverse effects of overreliance on natural resources on both mental and social well-being. Accordingly, this threshold can serve as a warning indicator for policymakers in resource-rich countries, representing a critical limit for economic and social policy planning.
The threshold model results for the natural resource income variable (LRE) further indicate a dual relationship between natural resources and happiness levels. When the share of natural resource rents is below the 6.92% threshold, the variable has a positive and significant effect on happiness, highlighting the constructive role of natural resources during early stages of development, particularly through public revenue generation, infrastructure improvement, and economic welfare enhancement. Once this threshold is exceeded, the coefficient of natural resources becomes negative and significant, suggesting that overreliance on natural resource income can reduce happiness levels. This shift in effect provides clear evidence of the resource curse phenomenon, which may undermine mental well-being through channels such as increased corruption, weakened governance, reduced economic diversification, and heightened social inequality. Therefore, the 6.92% threshold should be carefully considered as a critical economic and social limit in natural resource policy-making.

Conclusion
Overall, the results obtained from the estimation of the empirical models including the GMM fixed-effects regression and threshold analysis provide strong evidence of the complexity and multidimensionality of the relationship between economic variables and happiness levels in developing countries. The findings of this study not only confirm the existence of the happiness Kuznets curve but also highlight the significant effects of factors such as unemployment, corruption control, and natural resource utilization. In particular, the threshold model results indicate that the impact of natural resources on happiness depends on the level of resource exploitation, and beyond a specific critical threshold, this effect may become negative. Accordingly, economic growth alone cannot ensure a sustainable increase in happiness unless it is accompanied by good governance, appropriate redistribution policies, and economic diversification.