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Exploring the relationship between subjective well-being and objective poverty indices : evidence from panel data in South Africa

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  • Aida, Takeshi

Abstract

This study investigates the relationship between subjective well-being and objective poverty indices such as income poverty and multidimensional poverty. Although they are popular indices, very few studies have analyzed their relationship using rigorous econometric approach. By applying the Blow-up and Cluster estimation of fixed effects ordered logit model to a panel data collected in South Africa, this study finds that both income and multidimensional poverties significantly aggravate subjective well-being. However, their effects are not robust to the inclusion of household income, implying that being below the poverty lines does not provide additional information to explain subjective well-being. Moreover, a large part of the variation in subjective well-being cannot be explained by these objective poverty indices, suggesting strong complementarity between subjective and objective welfare measures. This study also finds that multidimensional poverty index, constructed based on principal component analysis, performs better than the conventional approach, casting doubt on the conventional multidimensional poverty index.

Suggested Citation

  • Aida, Takeshi, 2018. "Exploring the relationship between subjective well-being and objective poverty indices : evidence from panel data in South Africa," IDE Discussion Papers 707, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper707
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    References listed on IDEAS

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    1. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July.
    2. Gregori Baetschmann & Kevin E. Staub & Rainer Winkelmann, 2015. "Consistent estimation of the fixed effects ordered logit model," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 178(3), pages 685-703, June.
    3. Sabina Alkire & James Foster, 2011. "Understandings and misunderstandings of multidimensional poverty measurement," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 289-314, June.
    4. Alkire, Sabina & Santos, Maria Emma, 2014. "Measuring Acute Poverty in the Developing World: Robustness and Scope of the Multidimensional Poverty Index," World Development, Elsevier, vol. 59(C), pages 251-274.
    5. François Bourguignon & Satya R. Chakravarty, 2019. "The Measurement of Multidimensional Poverty," Themes in Economics, in: Satya R. Chakravarty (ed.), Poverty, Social Exclusion and Stochastic Dominance, pages 83-107, Springer.
    6. Alkire, Sabina & Foster, James, 2011. "Counting and multidimensional poverty measurement," Journal of Public Economics, Elsevier, vol. 95(7), pages 476-487.
    7. Michelle Adato & Michael Carter & Julian May, 2006. "Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 226-247.
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    Cited by:

    1. Salauddin Tauseef, 2022. "Can Money Buy Happiness? Subjective Wellbeing and Its Relationship with Income, Relative Income, Monetary and Non-monetary Poverty in Bangladesh," Journal of Happiness Studies, Springer, vol. 23(3), pages 1073-1098, March.

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    More about this item

    Keywords

    South Africa; Subjective well-being; Poverty line; Multidimensional poverty index; Panel data; Multiple imputation; Poverty; Costs and standard of living;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D60 - Microeconomics - - Welfare Economics - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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