Exploring the Link Between Quality of Life and Green Economy in EU Countries

ABSTRACT

Over time traditional economic models have shifted towards a short‐term profit without considering the consequences for the environment and social resources that may negatively impact the well‐being. As a solution, the green economy was developed to protect natural resources and improve human quality of life (QoL). While the extant literature addresses the sustainability impact on QoL, gaps remain, especially at the European Union (EU) level. Moreover, studies that consider green growth as an alternative measure of sustainability indices are limited. This study provides a novel perspective on the interaction between green economy and QoL across EU countries during 2019–2024 using a panel regression model, thus helping policymakers assess whether the green‐economy rules contribute to a better QoL. The green economy is proxied by the Green Growth Index (GGI), while the World Happiness Index (WHI) is used as a measure for QoL. After controlling for economic, environmental and social factors, results indicate that GGI is a negative yet insignificant predictor of WHI, becoming significant when lagged by 1 year. The effect is even stronger in countries with green growth above average during 2022–2024. Therefore, although green growth is beneficial in the long run, it may temporarily reduce welfare if not accompanied by appropriate social and economic measures. In addition, among the GGI components, only the natural capital protection exerts a positive effect on WHI. Therefore, policymakers should focus on the other three components to ensure that the transition towards a green economy will result in a better QoL.