From Income to Psychological Welfare: Do Education and Religiosity Matter in Developing and Developed Countries?

Using harmonised microdata from the World Values Survey Waves 3–7 covering 314,110 respondents in 99 countries, this study examines how income, education and multidimensional religiosity are associated with three indicators of psychological welfare: happiness, life satisfaction and perceived health. The analysis employs ordered logit models estimated separately for developing and developed countries, complemented by pooled specifications with interaction terms. The results show that income has the most consistent positive association with psychological welfare across all three indicators, with larger marginal associations in developing economies. Education is also positively associated with psychological welfare, especially life satisfaction and perceived health, and the interaction estimates suggest that the income–welfare association is larger among more educated respondents in some specifications. Religiosity displays more heterogeneous associations. Religious orientation and communal participation have stronger, more consistent positive associations with happiness and life satisfaction, whereas doctrinal belief and religious practice show weaker, less stable associations across welfare indicators. Income–religiosity interactions are less uniform and vary across religiosity dimensions, welfare outcomes and development stages. Overall, the findings suggest that the income–welfare association cannot be fully understood without considering education, religiosity and heterogeneity between developing and developed countries.

JEL Codes: I31, I24, Z12, O15