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"Because" would change the meaning of the sentence.

Nick is happy to be home. But I don't know if he's happy because I'm with him.

The above questions whether or not the narrator's presence is the cause of Nick's happiness. It is also awkwardly ambiguous. Is the narrator prevented from determining if Nick is unhappy, because the narrator's presence prevents him or her from making such a determination? No, but one must reason that out.

Colloquially, "happy that" can mean "pleased that." The original sentence questions only whether Nick is pleased with the narrator's presence. His general state of happiness might be coincidental. The narrator might make a determination in the negative.

Nick is happy to be home. But he's not happy that I'm with him.

I prefer not to elide "that" in such cases, because it gives the reader a hint of how the rest of the sentence is to be parsed.

"Because" would change the meaning of the sentence.

Nick is happy to be home. But I don't know if he's happy because I'm with him.

The above questions whether or not the narrator's presence is the cause of Nick's happiness. It is also awkwardly ambiguous. Is the narrator prevented from determining if Nick is unhappy, because the narrator's presence prevents him or her from making such a determination? No, but one must reason that out.

The original sentence questions only whether Nick is pleased with the narrator's presence. His general state of happiness might be coincidental.

I prefer not to elide "that" in such cases, because it gives the reader a hint of how the rest of the sentence is to be parsed.

"Because" would change the meaning of the sentence.

Nick is happy to be home. But I don't know if he's happy because I'm with him.

The above questions whether or not the narrator's presence is the cause of Nick's happiness. It is also awkwardly ambiguous. Is the narrator prevented from determining if Nick is unhappy, because the narrator's presence prevents him or her from making such a determination? No, but one must reason that out.

Colloquially, "happy that" can mean "pleased that." The original sentence questions only whether Nick is pleased with the narrator's presence. His general state of happiness might be coincidental. The narrator might make a determination in the negative.

Nick is happy to be home. But he's not happy that I'm with him.

I prefer not to elide "that" in such cases, because it gives the reader a hint of how the rest of the sentence is to be parsed.

1
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"Because" would change the meaning of the sentence.

Nick is happy to be home. But I don't know if he's happy because I'm with him.

The above questions whether or not the narrator's presence is the cause of Nick's happiness. It is also awkwardly ambiguous. Is the narrator prevented from determining if Nick is unhappy, because the narrator's presence prevents him or her from making such a determination? No, but one must reason that out.

The original sentence questions only whether Nick is pleased with the narrator's presence. His general state of happiness might be coincidental.

I prefer not to elide "that" in such cases, because it gives the reader a hint of how the rest of the sentence is to be parsed.