Happiness and the elderly: a subjective wellbeing impact of social grants in South Africa

Abstract

This study establishes the extent to which the state old age pension grant impacts on the subjective wellbeing of the elderly in South Africa for the period 2008 to 2015. It makes use of a sub sample of data collected from the first four waves of the National Income dynamics study (NIDS) composed of elderly persons aged between 55 and 64 years old to estimate the causal impacts of the grant. The main framework for establishing causal relationship was is the difference in difference model but ordinary least squares and fixed effects models were also estimated. Ordinal logistic regression model was estimated as a robustness check for other models and because of the ordinal nature of the dependent variable. The state old age pension consistently produced positive and significant estimates within linearly and non-linearly specified models. Within the difference in difference model specifically, anticipatory effect was checked and not found to exist, and the results indicate that, the SOAP significantly and statistically improves life satisfaction by 0.047 points on the 1 to 10point life satisfaction scale. Other big correlates of life satisfaction are income step, religion and having a medical aid which significantly increase life satisfaction by 0.625, 0.483 and 0.337 respectively. A 1000 rand increase in income per person improves life satisfaction by 0.047 points on the same measurement scale.