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 en- vironmental 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 environ- mental conditions, the pace at which they adopt eco-innovations, and the relative efficacy of the latter.