Economic And Quantitative Analysis docx.

Running head: ECONOMICS AND QUANTITATIVE ANALYSIS
Economics and Quantitative Analysis
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ECONOMICS AND QUANTITATIVE ANALYSIS1
Table of Contents
Purpose............................................................................................................................................2
Background......................................................................................................................................2
Method.............................................................................................................................................2
Result...............................................................................................................................................3
Discussion........................................................................................................................................8
Recommendation.............................................................................................................................9
References......................................................................................................................................10

ECONOMICS AND QUANTITATIVE ANALYSIS2
Purpose
The primary purpose of the report is to examine the relation between life satisfaction and
Gross Domestic Product.
Background
There is a long standing debate on the relation between income and life satisfaction
among the economists. This issue is particularly important because of its implication on policy
formulation (Stevenson and Wolfers 2013, pp.598-604). One study made by Easterlin showed
that despite significant increase in per capita income of USA between 1974 and 2004, there was
no significant improvement in the average satisfaction level of people. This finding was further
supported by research papers developed by some political scientist and psychologists (Diener,
Inglehart and Tay 2013, pp.497-527). In contrast to these findings one cross sectional study
confirmed a steadily increasing relation between income and life satisfaction at a given point of
time. Some studies found that life satisfaction though increases with income but up to a certain
level of income (Diener, Oishi and Lucas 2015, p.234). Because of different views among the
economists regarding the direction of relation between average income and life satisfaction
research in this area has attracted significant attention.
Method
In order to examine the relationship between life satisfaction and GDP, quantitative data
analysis method has been used considering the secondary data collected on average life
satisfaction and annual per capita GDP (Antwi and Hamza 2015, pp.217-225). Data are collected
for 35 selected countries from the published official statistics of OECD. Before estimating the
statistical relation between the two variables descriptive measures are first computed for getting

ECONOMICS AND QUANTITATIVE ANALYSIS3
overall summary of the data. Next, scatter diagram has been prepared to examine the relation
graphically. Finally, regression analysis has been conducted to evaluate impact of annual per
capita GDP on life satisfaction followed by analysis of statistical significance and goodness of
fit.
Result
Table 1: Descriptive statistics of Annual GDP per capita
From the descriptive statistics, average annual GDP is obtained as 39011.51. The
standard deviation for annual GDP 14006.21. The standard deviation of GDP per capita is less
than mean GDP per capita implying relative stability of the GDP per capita series. The highest
and lowest GDP per capita are recorded to be $86788.14 and $17122.53 respectively.
Luxemberg records the maximum GDP per capita and Mexico records minimum GDP per capita.