Does Economic Policy Uncertainty Affect Residents’ Happiness?

In macroeconomic management, decision-makers often face such problem as whether to constantly introduce new economic policies or strive to improve the economic policies with automatic stability function. The difference between the two is that the former will bring high policy uncertainty, and the effect of the latter may be inferior to the former. In view of this, it is of great policy significance to understand the opportunity cost of economic policy uncertainty(EPU), especially its impact on Residents’ happiness. This paper uses the micro data of Chinese General Social Survey(CGSS) to match with China’s provincial EPU index to estimate the impact of EPU on residents’ happiness. The results show that EPU has a negative impact on residents’ happiness because it affects residents’ medical insurance and their expectation of the future. The regions with more developed tertiary industry and the people with less stable employment and income are more vulnerable to the impact of EPU. Therefore, we should focus on improving the economic policy with the function of automatic stabilization, actively solve the various demands of informal employment and poor groups, and try our best to shield all kinds of improper “interpretation” of relevant economic policies.