The role of good governance in the effect of economic dependence on oil and climate change on happiness in Iran (QARDL approach)

Sadri, Farnoosh Alsadat; Amin Rashti, Narciss; Mehrabian, Azadeh; Seyfipour, Roya

doi:10.22126/pse.2025.11844.1183

The role of good governance in the effect of economic dependence on oil and climate change on happiness in Iran (QARDL approach)

Document Type : Original Article

Authors

¹ Ph.D. Student in Oil and Gas Economics- Oil and Gas Laws and Contracts , Department of Economics, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

² Assistant Professor, Department of Economics, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

10.22126/pse.2025.11844.1183

Abstract

Happiness is a psychological and material phenomenon that leads to increased economic productivity of humans. It is thought that oil-rich countries have higher economic growth and happier people, but in some of these countries, economic growth and happiness is lower. Environmental degradation and climate change caused by reasons such as fossil fuel consumption also affect happiness. Meanwhile, governments can influence the relationship between oil dependence and climate change on happiness through their governance. The aim of this article is to analyze the role of good governance in the impact of economic dependence on oil and climate change on happiness in Iran during the period 2005-2023. For this purpose, the QARDL method was used. The results showed that in the short term, oil dependence and economic growth in the top quintile had a positive effect, climate change had a negative effect in all three quintiles, and good governance had a positive effect on happiness in all three quintiles. In the long term, oil dependence and climate change had a negative effect in the low and high quintiles, and good governance and economic growth had a positive effect on happiness in all three quintiles. Calculating the final effect of oil dependence on happiness in the long run suggests a threshold of -0.07 in the low quantile and -0.66 in the high quantile, such that improving governance before (after) the threshold leads to a larger (smaller) negative effect of oil rent on happiness. The final effect of climate change on happiness indicates the existence of a threshold equal to -0.17 in the low quantile and -0.19 in the high quantile, such that improving governance before (after) the threshold leads to a larger (smaller) negative effect of climate change on happiness. According to the Wald test, in the short term, dependence on oil, governance, and climate change have a symmetric effect, and economic growth and governance have an asymmetric effect. In the long term, economic growth has an asymmetric effect, and dependence on oil, climate change, and governance have a symmetric effect on happiness.

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