Does entrepreneurial activity contribute to a nation’s happiness?

There has been some examination of the impact of the level of entrepreneurial activity within a country on ‘happiness’ indicators for that country, which ought to be considered as a fundamental question. Happiness in these studies is influenced not only by economic growth, social support and freedom, but also life expectancy, level of corruption, and individuals’ own assessments (World Happiness Report, 2023). Entrepreneurial activity is measured by a wide range of factors including innovation, competitiveness, infrastructure, labour skills, access to capital and openness for business. Naude, Amoros and Christi (2012) found tentative evidence of an inverse U-shape relationship between (opportunity) entrepreneurship and national happiness, concluding that opportunity-motivated entrepreneurship may contribute to a nation’s happiness, but only up to a point. They concluded that the happiness of a nation, based on a sample of 36 countries, cannot be indefinitely increased by boosting the numbers of opportunity entrepreneurs. More recently, Torres and Augusto (2020) found that a combination of conditions is required to achieve high levels of national well-being, including education, governance, and a philanthropic financial system, which potentially can be leveraged by entrepreneurial success. This paper examines indices of entrepreneurial activity across 95 countries over the 2020-2022 period and finds a positive relationship between the level of such activity and happy life evaluation, using data from the World Happiness Report (2023) and the Entrepreneurship Index (2021). The relationship between happiness and wealth (as measured by GDP per capita), is significant but marginal. This finding has implications for government policy and further research. It reinforces the suggestion that not everyone should become an entrepreneur, and innovation is not always progress. It also points to the need for a broader focus on implications of entrepreneurship for human development, which is likely to be rewarding from scientific, societal and policy-making perspectives.

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