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Exploring psychological well-being and poverty dynamics in South-Africa: evidence from NIDS waves 1-5

Author

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  • Nik Stoop

    (Southern Africa Labour and Development Research Unit, University of Cape Town, South Africa. Institute of Development Policy, University of Antwerp, Belgium and Centre for Institutions and Economic Performance, University of Leuven, Belgium)

  • Murray Leibbrandt

    (Southern Africa Labor and Development Research Unit, University of Cape Town. ARUA's African Centre of Excellence for Inequality Research, SALDRU, University of Cape Town.)

  • Rocco Zizzamia

    (Southern Africa Labor and Development Research Unit, University of Cape Town. ARUA's African Centre of Excellence for Inequality Research, SALDRU, University of Cape)

Abstract

The mechanisms that perpetuate poverty are still not well understood. An emerging literature focuses on the psychology of poverty, investigating psychological and behavioral factors that may affect poverty entry and make it difficult to escape poverty. This paper explores the relationship between psychological well-being and poverty in South Africa. We rely on Waves 1-5 of the National Income Dynamics Study (NIDS), a nationally representative household panel survey that spans a decade. A descriptive analysis shows a strong negative correlation between psychological well-being and per capita household expenditure, with individuals in lower expenditure deciles displaying significantly higher risks of depression and lower levels of life satisfaction. To identify causal effects, we turn to an econometric framework that accounts for endogenous initial poverty conditions, unobserved heterogeneity and non-random panel attrition. Preliminary results suggest that the risk of poverty significantly increases as psychological well-being deteriorates, and the other way around. We discuss a range of avenues for follow-up research.

Suggested Citation

  • Nik Stoop & Murray Leibbrandt & Rocco Zizzamia, 2019. "Exploring psychological well-being and poverty dynamics in South-Africa: evidence from NIDS waves 1-5," SALDRU Working Papers 240, Southern Africa Labour and Development Research Unit, University of Cape Town.
    • Handle: RePEc:ldr:wpaper:240
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    Cited by:

    1. Adhikari, Tamanna & Greyling, Talita & Rossouw, Stephanie, 2021. "The ugly truth about social welfare payments and households' subjective well-being," GLO Discussion Paper Series 883, Global Labor Organization (GLO).
    2. Garman, E.C. & Avendano, Mauricio & Araya, Ricardo & Evans-Lacko, Sara & McDaid, David & Zimmerman, A. & Lund, C., 2022. "Understanding the complex relationship between multidimensional poverty and depressive symptoms among young South Africans: a cross-sectional study," LSE Research Online Documents on Economics 116674, London School of Economics and Political Science, LSE Library.
    3. Jiang, Shan, 2020. "Psychological well-being and distress in adolescents: An investigation into associations with poverty, peer victimization, and self-esteem," Children and Youth Services Review, Elsevier, vol. 111(C).

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