Relationship between Happiness and Smoking: A Bootstrap Panel Causality Test

This study applies the recently developed bootstrap panel causality test proposed by Kónya (2006) to investigate the causal link between happiness and smoking using per capita cigarette consumption and happiness index for 5 countries (i.e. Japan, France, Germany, the UK, and the US) over the period of 1961-2003. Empirical results show a feedback for both Japan and France and independence for the other 3 countries. These results indicate smoking make people happy. However, in both Japan and France people smoke less if they feel happy. To reduce the omitted variable bias, we also added per capita real GDP as a control variable in our study over the 1969-2003 period. When doing this the empirical results show a feedback for France, a one-way Granger causality running from happiness to cigarette consumption for both Japan and the UK, and independence for the other 2 countries, Germany and the US. These results indicate smoking make people happy in France. However, in Japan, France and the UK people smoke less if they feel happy.