12.101 The United Nations’ World Happiness Report aims to demonstrate the role of variables other than income in determining people’s happiness. There are several candidates to build a prediction equation for happiness at the nation level: log GDP per capita, social support, healthy life expectancy at birth, freedom to make life choices, generosity, and perceptions of corruption. In the previous chapters, simple regression models using the data for 2021 provided in the data file Happiness Report Data were built with one of the above variables as the predictor. Now, we aim to build a multiple regression prediction model.

a. Prepare a correlation matrix for the life ladder score of happiness and the predictor variables.

Note the simple relationships between the ladder score and the predictor variables. In addition, indicate any potential multicollinearity problems between the predictor variables.

b. Prepare a multiple regression analysis of the ladder score on the potential predictor variables. Remove any nonsignificant predictor variables, one at a time, from the regression model. Indicate your best final model.

c. State the conclusions from your analysis and discuss the conditional importance of the variables in terms of their relationship to the life ladder score.