Does environmental innovation make us happy? An empirical investigation

The aim of this paper is to provide an efficient framework to study the relationship between happiness and eco-innovation, measured by eco-efficiency, considered as a subset of the wider question concerning the relationship between happiness and innovation. The conceptual background describes how happiness can be linked to environmental innovations, drawing potential relations among happiness, environment and innovations. An analytical model derives the relationship between happiness and eco-efficiency from a generic utility function. The empirical focus is on the effects of environmental innovation on population well-being for ten European countries over the period 1981-2011. Environmental innovation is measured by an eco-efficiency indicator (the percentage of total energy from combustible renewables and waste). Results from a panel data model show a positive correlation between eco-efficiency and happiness, linking countries' general well-being to environmental conditions, the pace at which they adopt eco-innovations, and the relative efficacy of the latter.