Spending for Happiness: A Comparative Study Using Data Envelopment Analysis

This study, titled Spending for Happiness: A Comparative Study Using Data Envelopment Analysis (DEA), examines the efficiency of government spending in enhancing happiness across 10 Middle Eastern and North African (MENA) countries. Grounded in happiness economics, the research builds on theories like the Easterlin Paradox (1974), which posits that income boosts happiness only up to a threshold, and explores debates on state intervention (Pigou vs. Buchanan). Using an output-oriented DEA model with variable returns to scale (VRS), the study evaluates how effectively public spending (input) translates into higher happiness scores (output). Key findings reveal stark disparities: the UAE (1.0 efficiency score) and Saudi Arabia (0.98) lead due to strategic investments in infrastructure and social programs, while Lebanon and Egypt, despite scoring 1.0, reflect outlier contexts (economic collapse and austerity, respectively). Mid- and low-efficiency countries (e.g., Tunisia, Jordan) underscore institutional weaknesses. The study concludes that happiness depends not on spending volume alone but on governance quality, transparency, and targeted allocations. Recommendations include strengthening fiscal oversight, prioritizing service quality over budget size, and fostering regional policy exchanges. By bridging economic and wellbeing metrics, the paper advocates for institutional reforms to maximize the impact of public expenditure on societal happiness, offering a framework for policymakers in MENA and beyond.