Understanding the relationship between advertising spending and happiness at the country level

Concerns have been raised as to the potentially deleterious effects of advertising on society. We examine this issue given the recent calls to explore the societal effects of international business activities, the substantive nature of advertising spending globally, and the movement by governments to hold businesses accountable for societal harms. We build upon the general theory of competitive rationality, suggesting a positive relationship between advertising spending and happiness at the country level. We integrate an institutional economics framework into the general theory of competitive rationality to understand country effects. We explore whether institutional environments (i.e., political, regulatory, and social) are associated with happiness and/or moderate the relationship between advertising spending and happiness. We empirically examine these relationships using a 34-country, 9-year unbalanced panel dataset. Our findings indicate that advertising spending at the country level is positively associated with happiness, even when accounting for country-level institutional direct and moderating effects. We discuss our results in comparison to prior findings, highlighting implications for international marketing theory and practice, and setting forth a foundation for debate and research in the field.