Cognitive Ability and Economic Growth : How Much Happiness is Optimal?

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 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 < .01) 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