Effect of remittances on the subjective well-being of households in South Africa

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(1)COPYRIGHT AND CITATION CONSIDERATIONS FOR THIS THESIS/ DISSERTATION. o Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. o NonCommercial — You may not use the material for commercial purposes.. o ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.. How to cite this thesis Surname, Initial(s). (2012) Title of the thesis or dissertation. PhD. (Chemistry)/ M.Sc. (Physics)/ M.A. (Philosophy)/M.Com. (Finance) etc. [Unpublished]: University of Johannesburg. Retrieved from: https://ujcontent.uj.ac.za/vital/access/manager/Index?site_name=Research%20Output (Accessed: Date)..

(2) EFFECT OF REMITTANCES ON THE SUBJECTIVE WELL-BEING OF HOUSEHOLDS IN SOUTH AFRICA. by. MARIQUE KRUGER 200506180. Submitted to the School of Economics in the College of Business and Economics in fulfillment of the requirements for the degree of MAGISTER COMERCII in ECONOMICS at the UNIVERSITY OF JOHANNESBURG Supervisor: Mduduzi Biyase. Co-Supervisor: Prof. Derick Blaauw. 2017.

(3) Subjective Well-being | Remittances. DECLARATION. I certify that the minor dissertation/dissertation/thesis submitted by me for the degree Master’s of Commerce (Economics) at the University of Johannesburg is my independent work and has not been submitted by me for a degree at another university. MARIQUE MARI KRUGER (Name in block letters – no signature). Page | ii.

(4) Subjective Well-being | Remittances. Acknowledgement The road to finalising a Master’s degree has been rather circuitous. Its successful completion can be attributed to all the special people in my life who have motivated and supported me, and who have stayed with me during this journey. First and foremost, I wish to thank God for granting me the ability and the desire to learn and for His blessings throughout my life. To my Oumie; thank you for affording me the opportunity to attend an academic institution such as the University of Johannesburg (UJ). Without your financial assistance in the first place none of this would have been possible. Abba, when Oumie was no longer able to help, you always made sure that all my tuition requirements and needs were met. I want to thank you for that. I am deeply indebted to Mr Mduduzi Biyase and Professor Derick Blaauw as my supervisor and co-supervisor. Without your guidance, support and attentive feedback which were aimed at moving me forward, I would not have been able to do this. I am extremely grateful for having supervisors who responded to my questions and queries, addressed my concerns promptly, and gave continuous encouragement. Mr Biyase, you assisted and motivated me until the very end, even while attempting to complete your own PhD. Thank you! Prof Blaauw, although you were not able to help me to completion I would like to thank you too. You are the one who led me in the direction of selecting this topic. Ansa, I would like to express my very sincere gratitude to you for your help with the data for the empirical analysis and model specification chapter of this paper. Without your help, this process would have been a more strenuous one. To those special friends who all had some role to play in the completion of this paper by keeping me going, supporting and encouraging me, for the countless cups of coffee and dinner dates, thank you. You have shown me that friends matter in quality rather than quantity.. Page | i.

(5) Subjective Well-being | Remittances. I want to thank my parents, my siblings and ALL family members for their love and support. Each one of you emboldened me in some way or another. For that I am grateful. Lastly, I want to give a special thank you to my partner, Shane, and my daughter, Mira. Completing this paper was no mean feat, and you never once allowed me to think that it was not possible. I am indebted to you for always supporting, encouraging and motivating me to give my all. Your love and support motivated me to push to the end.. Page | ii.

(6) Subjective Well-being | Remittances. Abstract This thesis focuses on the impact of remittances on the Subjective Well-being (SWB) of households in South Africa. Using data from the first three waves of the National Income Dynamics Study (NIDS), we investigate whether receiving remittances from a migrant family member leaves the remaining family members feeling more satisfied with their lives as a whole. The results from our cross-section and panel analyses indicate that remittances do indeed have a positive impact on SWB. Our findings further show that the majority of the coefficients seem robust for the type of data used (i.e. cross-sectional or panel), while also seeming robust for the type of estimation method used. This method was. pooled ordered probit for cross-sectional data, and a pooled ordered probit and. Random Effect Ordered Probit (REOP) model for panel data.. Page | iii.

(7) Subjective Well-being | Remittances. Table of Content Acknowledgement.......................................................................................................... i Abstract......................................................................................................................... iii List of Figures .............................................................................................................. vi List of Tables ............................................................................................................... vii List of Abbreviations.................................................................................................. viii CHAPTER 1: Introduction ............................................................................................. 1 1.1 Background ...................................................................................................................... 1 1.2 Problem statement and objectives .................................................................................... 7 1.3 Data overview ................................................................................................................... 8 1.4 Structure of the thesis ......................................................................................................10. CHAPTER 2: Literature review on Subjective Well-being ........................................ 11 2.1 Introduction......................................................................................................................11 2.2 Theoretical literature review .............................................................................................12 2.2.1 Measuring happiness or well-being ...........................................................................12 2.2.2 Theories about Subjective Well-being .......................................................................15 2.3 Empirical literature review ................................................................................................18 2.3.1 Determinants of happiness ........................................................................................18 2.3.1.1 Happiness and income .......................................................................................18 2.3.1.2 Happiness and age .............................................................................................21 2.3.1.3 Happiness and gender........................................................................................23 2.3.1.4 Happiness and race ............................................................................................24 2.3.1.5 Happiness and marital status..............................................................................26 2.3.1.6 Happiness and height .........................................................................................27 2.3.1.7 Happiness and BMI ............................................................................................28 2.3.1.8 Happiness and religion .......................................................................................30 2.3.1.9 Happiness and smoking .....................................................................................31 2.3.1.10 Happiness and having a sickness/disability ......................................................32 2.3.1.11 Happiness and exercise....................................................................................32 2.3.1.12 Happiness and education..................................................................................33 2.3.1.13 Happiness and location ....................................................................................34 2.4 Conclusion.......................................................................................................................35 Page | iv.

(8) Subjective Well-being | Remittances. CHAPTER 3: Literature review on remittances and migration ................................ 38 3.1 Introduction......................................................................................................................38 3.2 Theoretical literature review .............................................................................................39 3.2.1 Migration ...................................................................................................................39 3.2.1.1 Definition and types of migration .........................................................................39 3.2.1.2 Theories and models regarding the causes of migration .....................................40 3.2.2 Remittances ..............................................................................................................44 3.2.2.1 Types of remittances ..........................................................................................45 3.2.2.2 Reasons why people remit..................................................................................47 3.3 Empirical literature review ................................................................................................52 3.3.1 Impact of remittances ................................................................................................52 3.3.1.1 Micro-economic impact of remittances ................................................................52 3.3.1.2 Macro-economic impact of remittances...............................................................58 3.4 Conclusion.......................................................................................................................59. CHAPTER 4: Methodology ......................................................................................... 62 4.1 Introduction......................................................................................................................62 4.2 Empirical Analysis ...........................................................................................................64 4.2.1 Data ..........................................................................................................................64 4.2.2 Variables and descriptive analysis ............................................................................66 4.2.3 Remittances by population group ..............................................................................68 4.2.4 Subjective Well-being ................................................................................................69 4.2.4.1 Subjective Well-being and remittances ...............................................................71 4.3 Specification of the model ................................................................................................73 4.3.1 Variables used in the empirical analysis ....................................................................73 4.3.2 Method/Model ...........................................................................................................77 4.3.3 Empirical results ........................................................................................................79 4.3.3.1 Cross-section estimates: ordered probit..............................................................79 4.3.3.2 Panel estimates: Pooled ordered probit and Random Effect Ordered Probit .......80 4.4 Conclusion.......................................................................................................................83. CHAPTER 5: Concluding remarks ............................................................................. 85 APPENDIX A ................................................................................................................ 88 Reference List ............................................................................................................. 90 Page | v.

(9) Subjective Well-being | Remittances. List of Figures Figure 1: Stock of migrants globally ........................................................................................... 2 Figure 2: Ten main inter-provincial migration streams in South Africa ........................................ 5 Figure 3: Remittances as a percentage of household income in South Africa ............................ 6 Figure 4: Subjective Well-being for all three waves ...................................................................70 Figure 5: Subjective Well-being and remittances received or not ..............................................72. Page | vi.

(10) Subjective Well-being | Remittances. List of Tables Table 1: Resource flows to developing countries (US$ billion) ................................................... 2 Table 2: Migratory patterns (in number of people) between the censuses of 2001 and 2011 ..... 5 Table 3: Summary of findings in the literature on the effect of SWB on other explanatory variables ...................................................................................................................................35 Table 4: Summary of findings in the literature on the micro-economic impact of remittances ....58 Table 5: Characteristics of respondents for three waves of the NIDS data set ..........................67 Table 6: Remittances by population group ................................................................................68 Table 7: A summary of the explanatory/control variables used in the empirical analysis ...........76 Table 8: Results for cross-sectional and panel analyses ...........................................................82 Table 9: Results for panel analysis using remittances per capita ..............................................89. Page | vii.

(11) Subjective Well-being | Remittances. List of Abbreviations BHPS BLUE BMI BoP CHE ENIGH ESS FDI GDP GSOEP GSS IMF INEG NELM NIDS ODA OECD OHS OLS PBI PQLI PSLSD PWI QLFS REOP RUMiC SADC SALDRU SHIW Stats SA SWB UK USA. Page | viii. British Household Panel Survey Best Linear Unbiased Estimator Body Mass Index Balance of Payments Council on Higher Education Encuesta Nacional de Ingresos y Gastos de los Hogares European Social Survey Foreign Direct Investment Gross Domestic Product German Socio-Economic Panel General Social Survey International Monetary Fund Instituto Nacional de Estadistica New Economics of Labour Migration National Income Dynamics Study Official Development Aid Organisation for Economic Co-operation and Development October Household Survey Ordinary Least Squares Personal Well-being Index Physical Quality of Life Index Project for Statistics on Living Standards and Development Personal Well-being Index Quarterly Labour Force Survey Random Effect Ordered Probit Rural Urban Migration in China Southern African Development Community Southern Africa Labour and Development Research Unit Survey of Household Income and Wealth Statistics South Africa Subjective Well-Being United Kingdom United States.

(12) Subjective Well-being | Remittances. CHAPTER 1: Introduction 1.1 Background International migration is deemed one of the most important factors that affect the economic relations between developed and developing countries in the 21 st century (Adams 2006). The number of international migrants has been increasing at a rapid rate since the start of the new millennium. This has led to the number of migrants increasing at a faster rate than the world’s population, and as a result, the share of migrants to that of the world population was recorded at 3.3% in 2015, up from 2.8% recorded in 2000 (United Nations 2016). It was estimated that in 2015 a total of 157 million migrants (which equates to nearly 65.0% of all migrants) originated from middle-income countries. Between 2000 and 2015 the number of migrants from these middle-income countries increased at a faster rate than migrants from countries that fell in any of the other income groups. Furthermore, a total of 25 million migrants (10.0% of all migrants) originated from low-income countries, while the remainder of the migrants originated from high-income countries in 2015 (United Nations 2016). The number of migrants has increased quite significantly in both developed and developing countries between 2000 and 2015 (see Figure 1 below). The total number of migrants. (developed. plus. developing. countries). was. recorded. at. roughly. 244 million in 2015, up from 173 million recorded in 2000. This signals a 41.0% increase over the 15-year period (World Bank 2016).. Moreover, the number of migrants in. developing countries increased by nearly 34 million to just over 103 million between 2000 and 2015, while the number of migrants in developed countries increased by roughly 37 million during the same period (United Nations 2016).. Page | 1.

(13) Subjective Well-being | Remittances Figure 1: Stock of migrants globally. 103 218 281. 2015. 140 481 955 89 153 918. 2010. 132 560 325 74 087 991. 2005. 117 181 109 69 327 946. 2000. 103 375 363 0. 50 000 000. 100 000 000. Developing regions. 150 000 000. Developed regions. Source: United Nations (2016). The increase in the number of migrants worldwide in recent years can be ascribed to better job opportunities, internal conflict and war, climate change and improved access to information through the internet (World Bank 2016). Individuals thus take the decision to migrate to look for better job opportunities with higher income-earning potential where most of these migrants aim to send money (in the form of remittances) to the family/household back home. Below is a table of the different resource flows to developing countries. Table 1: Resource flows to developing countries (US$ billion) 2008. 2009. 2010. 2011. 2012. 2013. 2014. Remittance inflows globally. 460. 429. 464. 526. 547. 572. 593. Remittance inflows to developing countries. 325. 303. 336. 378. 401. 416. 431. Remittance inflow to developing countries as % of global. 70.7. 70.6. 72.4. 71.9. 73.3. 72.7. 72.7. Foreign Direct Investment (FDI). 541. 385. 529. 630. 583. 671. 662. Official Development Aid (ODA). 123. 121. 129. 135. 127. 135. 135. Source: World Bank (2016). Page | 2.

(14) Subjective Well-being | Remittances. There has been a steady increase in remittance inflows in recent years, both globally and to developing countries (Table 1). Global remittance inflows have increased by 28.9% between 2008 and 2014, to US$593.0 billion, whilst remittance inflows to developing countries increased by 32.6%, to US$431.0 billion during the same period (World Bank 2016). Between 2008 and 2014, the share of remittance inflows to developing countries to that of remittance inflows globally, was more than 70.0%. Moreover, this share increased at a steady pace from just over 70.0% in 2008 to nearly 73.0% in 2014, highlighting the increasing importance of remittances to developing countries. In 2014, Official Development Aid (ODA) was recorded at US$135.0 billion whilst the flow of remittances to developing countries was recorded at US$431.0 billion during the same period. This indicates that these remittance inflows were three times the size of ODA in 2014. While international migration has received more attention in recent debates pertaining to migration, the significance of internal migration may be greater when one has a look at the number of people who are involved in the internal migration process along with the importance of remittances and the poverty reduction potential of migration (Deshingkar & Grimm 2005). It is therefore important to understand migration, the reasons why it occurs and the implications of migration in a country such as South Africa as specific institutional conditions made permanent urban settlement impossible for most migrants in the past. This in turn led to a high prevalence of temporary/circular migration within South Africa (Casale & Posel 2006). According to Peberdy and Crush (1998) migration in South Africa was controlled by the “Aliens Control Act” of 1991 until 2002. Here, a series of state interventions was used in order to try to control and mobilise labour while also putting measures in place that made permanent settlement in urban areas impossible for most migrants (Posel 2003).. Page | 3.

(15) Subjective Well-being | Remittances. Thus, many of South Africa’s residents, including citizens and non-nationals, were faced with situations where their options for relocation were limited. Their options were limited because there were strict rules that told individuals where they could live, and when and how they could move (Landau and Wa Kabwe-Segatti 2009). In the late 1980s, the first formal restrictions regarding African urbanisation within South Africa were lifted which led to an increase in possibilities for individuals to migrate along with their families. This came with the expectation that there would be a replacement of temporary/circular migration with permanent settlement of people at their place of work within South Africa (Posel 2003). One would also expect that remittances to rural areas would fall when there is a decline in circular migration. This is because migrants can now migrate together with their families or be joined at their place of work by their families at a later stage. Urbanisation might also allow migrants to develop new and permanent ties that could lead to an increase in the crowding out of remittances to the household of origin (Posel 2003). Casale and Posel (2006) conducted research based on a nationally representative household survey for the period 1993 to 2002. Their results indicated that permanent migration was not replacing temporary/circular migration as would be expected. Instead, they found an increase in the number of households that reported that they had at least one member who was absent for a certain period of time each year to work, or at least to look for work (Casale & Posel 2006). Below is a table published by Statistics South Africa (Stats SA) (2012) on the results of South Africa’s migratory patterns between the census of 2001 and that of 2011.. Page | 4.

(16) Subjective Well-being | Remittances Table 2: Migratory patterns (in number of people) between the censuses of 2001 and 2011 Emigration (a). Immigration (b). Net-migration (c)=b-a. Western Cape. 128 967. 432 790. 303 823. Eastern Cape. 436 466. 158 205. -278 261. Province. Northern Cape. 69 527. 62 792. -6 735. Free State. 151 402. 127 101. -24 301. KwaZulu-Natal. 281 568. 250 884. -30 684. North West. 166 008. 273 177. 107 169. Gauteng. 402 271. 1 440 142. 1 037 871. Mpumalanga. 191 089. 243 934. 52 845. Limpopo. 372 283. 219 426. -152 857. Source: Stats SA (2012). The table above indicates that the Eastern Cape, Northern Cape, Free State, KwaZulu-Natal and Limpopo recorded a net out-flow of people during the 10-year period between the censuses of 2001 and 2011, whilst the Western Cape and Gauteng recorded the highest in-flow of people during the same period. Stats SA (2015) also conducted a study on the migration dynamics within South Africa by using data from the 2011 census. They found that the top 10 main inter-provincial migratory streams in the country made up 57.3% of migratory moves.. From province to province. Figure 2: Ten main inter-provincial migration streams in South Africa FS to GP. 3,37. GP to WC. 3,42. GP to NW. 3,69. EC to KZN. 3,87. NW to GP. 4,23. MP to GP. 4,71. EC to GP. 6,04. EC to WC. 7,67. KZN to GP. 8,27. LP to GP. 12,06 0. 2. 4. 6. Percent Source: Stats SA (2015). Page | 5. 8. 10. 12. 14.

(17) Subjective Well-being | Remittances. The above figure confirms that Gauteng is the main destination for migrants in South Africa. It also shows that the movement of migrants from Limpopo to Gauteng makes up the largest percentage thereof. As stated by Casale and Posel (2006), although restrictions regarding the movement and permanent settlement of people in South Africa were lifted many years ago, evidence suggests that the patterns regarding temporary migration still persist. Furthermore, vast numbers of households are still relying on remittances by migrants (Biyase 2012). Biyase (2012) used data from the 2008 National Income Dynamics Study (NIDS) in order to determine the relationship between poverty and remittances in South Africa. Here, actual per capita income excluding remittances was compared with per capita income which included remittances. The results showed that the poverty rate was significantly higher when the per capita income excluded remittances. The graph below depicts remittances as a share of income for all the provinces in South Africa.. Province. Figure 3: Remittances as a percentage of household income in South Africa SA Limpopo Mpumalanga Gauteng North West KwaZulu-Natal Free State Northern Cape Eastern Cape Western Cape 0,00. 0,10. 0,20. 0,30. KwaZulu- North Natal West 0,37 0,36. 0,40. 0,50. Western Eastern Northern Cape Cape Cape 2012 0,23 0,45 0,40. Free State 0,34. 2010. 0,20. 0,42. 0,34. 0,50. 0,45. 0,44. 0,48. 0,39. 0,53. 0,43. 2008. 0,22. 0,44. 0,26. 0,36. 0,37. 0,37. 0,32. 0,34. 0,44. 0,36. Gauteng 0,38. Mpumala Limpopo nga 0,28 0,45. Remittances as a % of household income Source: NIDS 2008, 2010 and 2012. Page | 6. 0,60 SA 0,37.

(18) Subjective Well-being | Remittances. According to Stats SA (2012), the Eastern Cape and Limpopo provinces had the biggest outflow of migrants in recent years (Table 2). Figure 3 further supports this argument. It is clear from the figure above that for the Eastern Cape and Limpopo provinces remittances provided the highest share of income. Both these provinces reported that remittances made up more than 40.0% of the household’s income between 2008 and 2012. Furthermore, for most of the migrants in South Africa, remittances contributed more than 35.0% to their household income between 2008 and 2012. In 2016, the National Treasury released a report on national minimum wages for South Africa in which they stated that more than 51.0% of the South African population lived below the poverty line of R1 036.07 per month (National Treasury 2016). Remittances can therefore be an important source of additional income to many households in South Africa. This is especially the case if half the country lived below the poverty line of R1 036.07 per month, and if remittances have contributed at least 35.0% to the household income in recent years. Without remittances as a source of income many of the households that live below the poverty line would find themselves in far more dire situations.. 1.2 Problem statement and objectives Despite the possibility of receiving money (remittances) when a household member migrates, the household is likely to be disrupted in the sense that the migrant may have contributed to the household; either through the market or chores at home (Borraz, Pozo & Rossi 2007).. It is often the breadwinner in the household who migrates, and the family is thus faced with a situation where both the monetary and household responsibilities have to be assumed by remaining family members. This in turn could have an impact on the Subjective Well-being (SWB) of the family members who are left behind. Borraz et al., (2007) used SWB and migration data in Cuenca, one of the largest cities in Ecuador, to examine the impact that migration can have on the happiness of the family left behind. Their results suggest that migration reduces the happiness of the family left behind, and Page | 7.

(19) Subjective Well-being | Remittances. that remittance inflows that accompany migration, does not increase the happiness levels of the recipients. While the literature on the topics of self-reported happiness/SWB and remittances has developed significantly in recent years, there are two key aspects that characterise the current literature that is available on these topics. Firstly, it was found that only a few international studies focused on the impact of remittances on SWB. See for example Akay, Giulietti, Robalino and Zimmermann (2012) who conducted a study on remittances and well-being among rural-to-urban migrants in China, whilst Andersson’s (2012) study aimed to determine the effect of remittances and migration on household welfare in Ethiopia. Moreover, Binci and Giannelli (2012) conducted a study to determine the effect of domestic and international remittances on children’s well-being by using data from the Vietnam Living Standards Surveys. Secondly, and more importantly, to the best of our knowledge there are no studies of this nature that aims to determine the impact of remittances on SWB in South Africa. Therefore, because of the limitations that are evident in research this study’s objective is to determine the effect of remittances on the SWB of households in South Africa. In doing so, we will fill some of the gaps in the empirical literature of remittances and SWB internationally, whilst being a stepping stone for the analysis on a domestic level.. 1.3 Data overview The census, the Project for Statistics on Living Standards and Development (PSLSD), the October Household Survey (OHS) and the Quarterly Labour Force Survey (QLFS), which includes a migration module for one quarter every three years, are some of the main sources of migration data in South Africa (Stats SA 2015). These four surveys are conducted by Stats SA. Although the use of census data in migration analyses has the advantage of national coverage which allows for representativity, its volume causes loss of more detailed information. Household surveys thus serve as an alternative source of migration data that Page | 8.

(20) Subjective Well-being | Remittances. can be used for analysing and monitoring both demographic and socio-economic changes (Stats SA 2015). These data sources are important to many people/institutions that use the data sets to make sound economic decisions. There are some limitations, however, that are evident in the surveys undertaken by Stats SA. These limitations will be discussed in more detail in Chapter 4. However, the most noteworthy shortfalls that are evident in the Stats SA surveys are that questions on remittances are either limited or completely absent, and that none of the surveys refer to well-being. Hence, a need exists to develop a household survey that addresses the limitations that are evident in the Stats SA surveys. NIDS, initiated by the South African presidency in 2006, was designed as a nationally representative household panel survey (Leibbrandt, Woolard & De Villiers 2009). Moreover, the ability to follow the movement of people from the original 7 305 households is a key feature of this panel study. In doing so, the movement of household members are adequately captured in later waves. NIDS, which is implemented by the Southern Africa Labour and Development Research Unit (SALDRU), was the first national panel study that documented the dynamic structure of a sample of household members in terms of changes in their income, expenditure, assets, access to services, education and other dimensions of well-being (Leibbrandt et al., 2009). The study began in 2008 and the data was collected along with detailed information regarding expenditure and income such as remittances on a nationally representative sample of over 28 000 individuals. NIDS is currently also the only household survey in South Africa that includes questions requesting individuals to subjectively assess their well-being in each of the waves. This makes it possible to explore changes in subjective measures over time (Posel 2012). Due to the inclusion of questions on remittances and SWB, making the data suitable for our needs, we will use the NIDS dataset for the analyses.. Page | 9.

(21) Subjective Well-being | Remittances. 1.4 Structure of the thesis In Chapter 2 the topic of SWB will be covered in detail. Firstly, the theoretical literature review on the topic of SWB will be discussed. This section will cover an extensive analysis of what is available in current literature on the measurement, and the different theories thereof will also be addressed. Lastly, the empirical literature review will analyse and discuss the determinants of happiness. Chapter 3 examines the theory regarding migration and remittances. As in Chapter 2, this section comprises both a theoretical and empirical review. Firstly, the theoretical literature review will discuss the definition, different types of migration and theories regarding the causes of migration. Remittances, as well as the different types of remittances and the reasons why people remit are then explained. In the empirical literature review the impact of remittances will be discussed. In Chapter 4 the methodology of the empirical analysis and specification of the model will be elaborated on. Firstly, the section on the empirical analysis will examine the NIDS data set as the appropriate data source for this study. The results of the descriptive analysis of the different categorical and/or dummy variables will also be discussed. In addition to that, additional analyses were conducted on both remittances and SWB in order to have a better understanding of the dependent and main independent variable of this study. Secondly, specification of the model will examine the impact of remittances on the SWB of households in South Africa with the aid of a cross-sectional and panel data by applying an ordered probit and Random Effect Ordered Probit (REOP) model. Chapter 5 will give concluding remarks and make recommendations.. Page | 10.

(22) Subjective Well-being | Remittances. CHAPTER 2: Literature review on Subjective Well-being 2.1 Introduction The theory of Subjective Well-being (SWB) has been a widely discussed topic (Easterlin 1974, Diener, Sandvik, Seidlitz and Diener 1993, Clark and Oswald 1996, Blanchflower and Oswald 2004) since the 1970s. It was in the 1974 seminal paper by Richard Easterlin where the Easterlin Paradox was first introduced, sparking an ongoing debate among researchers. According to this paradox, people were not reporting increases in their happiness levels, despite increases in their personal income over time, suggesting that happiness data are typically stationary in spite of considerable increases in income (Di Tella & MacCulloch 2005). SWB is a concept that is commonly found in the literature in the fields of sociology and psychology. It is an assessment by the individual in terms of his or her own well-being as determined by his or her own opinion (McBride 2001). Some researchers (Camfield 2003) explain SWB to be a subjective measurement of one’s satisfaction with life taken as a whole1. The aim of this chapter is to analyse the theory of SWB and the determinants, which are used to measure it. Various surveys are used in reports on SWB or happiness. An example of such a survey would be the World Values Survey which asks how satisfied the individual is with his or her life as whole these days when all things are considered (Kahneman & Krueger 2006). There are different variables that can affect an individual’s happiness. According to Frey and Stutzer (2002) happiness depends on three sets of factors. The first set refers to demographic factors (personal characteristics) which include aspects such as age, gender, education and health. The second set is economic factors such as income and inflation. The last set consists of political factors such as the extent of possibilities for. 1 SWB is often referred to as “happiness” (Conceição & Bandura 2008). Thus, SWB and happiness/life satisfaction will be used interchangeably throughout this paper.. Page | 11.

(23) Subjective Well-being | Remittances. citizens to be able to participate in politics (Frey & Stutzer 2002). When the determinants of happiness are discussed in this chapter, the focus will be on demographic (personal characteristics) and economic factors. The remainder of this chapter will discuss the way in which SWB is measured (Section 2.2.1). Section 2.2.2 will address some of the theories that are prevalent in the literature regarding SWB. Different determinants (economic and demographic) of SWB will be discussed in Section 2.3 which forms part of the empirical literature review. The manner in which these determinants affect SWB will also be discussed based on information found in the literature. The determinants discussed will form part of the descriptive and empirical analyses that will be conducted in Chapter 4, as they will be the variables used in order to analyse SWB.. 2.2 Theoretical literature review 2.2.1 Measuring happiness or well-being Not only is it difficult to define well-being but measuring it seems to bring about differences in opinion among researchers. There are two broad categories for measuring well-being: objectively and subjectively. Objective measures are explained by Conceição and Bandura (2008), where certain observable facts such as economic and social or environmental statistics measure well-being. On the other hand, people’s feelings or real experiences are captured through subjective measures of well-being, where well-being is assessed through ordinal measures (McGillivray & Clarke 2006). Conceição and Bandura (2008) further identify two types of objective measures; namely one-dimensional well-being and multi-dimensional well-being. The one-dimensional aspect of well-being takes Gross Domestic Product (GDP) as a measure of utility because people’s well-being increases with the consumption of food, clothing and housing. This is seen as a fundamental assumption of standard economic analysis where everything that is produced is either consumed or invested in a country in a year, which leads to the use of GDP as a yardstick of well-being and progress (Conceição & Bandura 2008).. Page | 12.

(24) Subjective Well-being | Remittances. However, there are some limitations in the use of GDP as an objective measure of well-being. For one, the changes in asset values are not taken into account with the GDP, and these changes can influence an individual’s consumption patterns (Conceição & Bandura 2008). Moreover, non-market activities such as housework or illegal activities along with certain externalities such as pollution or depletion of natural resources are also not taken into account (Giovannini, Hall & d’Ercole 2007). In spite of the flaws/limitations that GDP has as a measure of objective well-being, there is a general consensus that GDP is a multi-dimensional concept which takes into account several pertinent aspects of human life. An alternative way of constructing a composite measure that captures the multi-dimensional aspects of well-being, is the use of different components that are weighted in order to form an index (Conceição & Bandura 2008). However, despite the availability of different indices, Easterlin (2001) explained that the principal way of measuring SWB is by using a direct question. Fuentes and Rojas (2001) support this argument by stating that when putting questions to the respondent, different scales have been used for measuring SWB. The individuals are requested to report how happy or satisfied they feel about their lives in general. A list of options is then offered to each question where the options are ranked according to the levels of happiness. Some of the scales that were found throughout the relevant literature include but are not limited to; a three-point happy scale which asks how happy the individual is when taking everything into consideration. The options provided to the answers ask whether the individual is very happy, more or less happy or unhappy (Palomar 1997). Second is the life as a whole index, where individuals are asked how happy they are with their lives in general. There are seven options to choose from: terrible, unhappy, generally unsatisfied, neutral, generally satisfied, satisfied or delighted. This index is also known as the “D-T scale” (delighted-terrible) (Andrews & Whitey 1976). Last is the self-fulfilment index which uses the D-T scale but asks different sets of questions such as how the individual feels about his or her sense of purpose in life or how they feel about their achievements in life (Palomar 1997). Page | 13.

(25) Subjective Well-being | Remittances. There are, however, some drawbacks to the use of this type of question to determine SWB. According to Easterlin (2001), some measurement issues such as the reliability and the validity of the replies may arise. This might be due to respondents not reporting their true feelings, or possible biases that might occur from the context in which the question was asked. Comparability also comes into play. The happiness questions generally leave the individual to define well-being in the way that he or she sees fit. Kingdon (2009) further adds that a transitory state such as an individual’s mood at the time of the interview may also influence the response to the happiness question. For example, if the individual is for whatever reason in a particularly good mood when the questionnaire has to be completed, the answers might show a bias in favour of happiness. The opposite also holds, if the individual is sick or tired or just not in a good mood, the results might show that the person is an unhappy individual, where it might not actually be the case. Another issue that arises in this type of study is that of causality. This issue is perceived differently between economists and psychologists.. Becchetti and Castriota (2008). explain that economists tend to look at changes in life events and their effects on well-being. On the other hand, psychologists are of the opinion that each person inherits certain fixed traits at birth or childhood, which in turn affect future life events. Uncertainty about the variable that causes SWB and its consequences can be seen as a very important problem that occurs in research (Headey, Veenhoven & Wearing 1991). The majority of variables described in literature refer to those that are causes of SWB. However, some variables were shown to be correlates of SWB, and may be both causes and consequences which refer to the top-down and bottom-up theory of SWB (Diener 1984). Diener, Suh, Lucas and Smith (1999) stated that the bottom-up approach is built on Wilson’s (1967) idea that there are basic needs, as well as, universal human needs. According to this approach, it is assumed that people construct their judgement of life satisfaction in a bottom-up manner. This may include aspects such as demographic Page | 14.

(26) Subjective Well-being | Remittances. factors where happiness consists of many happy experiences. Thus, individuals assess the conditions of their lives, and then aggregate conditions to arrive at an overall evaluation (Lucas 2004). The alternative to the bottom-up approach is a top-down process. In the top-down approach people first compute a general life satisfaction judgement, and then rely on this general feeling when judging more specific domains (Lucas 2004). From a South African perspective, Møller (2004) distinguishes between the two theories in the following way: firstly, the bottom-up theory has traditionally dominated quality of life or SWB research and can be explained as being an individual’s satisfaction with the various domains of his or her life which determines overall well-being and happiness. Secondly, the top-down theory, also known as the Multiple Discrepancy Theory, states that the way in which an individual feels about certain aspects of his or her life is determined by that individual’s overall satisfaction with life. A possible example in the South African context of the top-down theory is “Madiba fever,” more commonly referred to as the Mandela factor (Møller 2004). This implies that he (Nelson Mandela) had a presence and charisma that left everyone feeling happier in spite of prevailing circumstances. The next section will give an overview regarding some of the different theories that can be found in the literature on SWB. These include the set-point theory, the adaptation theory, the absolute and relative income theories and lastly, the authentic happiness theory.. 2.2.2 Theories about Subjective Well-being The set-point theory is regarded as the dominant theory in SWB research. This theory states that the long-term SWB of an adult individual is stable. This is because SWB depends on personality traits and other generic factors (Headey, Schupp, Tucci & Wagner 2008). Page | 15.

(27) Subjective Well-being | Remittances. According to Easterlin (2004), set-point can be explained where individuals are thought to have a fixed set-point of happiness or life satisfaction that is determined by genetics and personality. He further explains that certain life events such as the individual getting married or divorced, losing his or her job or having a serious injury or disease can cause a temporary deflect of the individual above or below the set-point. Despite the aspects (such as these mentioned above) which can affect an individual’s life, the individual will adjust to the circumstances and return to the given set-point, also referred to as “hedonic adaptation” (Easterlin 2004). In an article on adaptation, Brickman and Campbell (1971) argued that people were confined to a hedonic treadmill. In other words, people will experience stable levels of well-being due to the fact that they tend to adapt to the most extreme life circumstances over time, whether positive or negative. A third theory regarding SWB is the relative income hypothesis which was introduced by James Duesenberry (1949). The reason for the development of this theory was to reduce the differences between cross-sectional and time-series properties related to consumption data. Thus, an individual consumption function that is dependent on the current income of other people was proposed (Duesenberry 1949). Easterlin (1995) gives a simple example that could be used to explain the relative income theory. When asked whether one would feel better off knowing one’s income was higher or growing at a faster rate than everyone else’s, generally the answer would be yes. On the reverse side, if you were asked the same question when everyone else’s income increased at a substantial rate while yours remained unchanged, the answer would be that you would feel less well-off. Even though an individual’s income might be unchanged when everyone around him or her received a higher income, that person would feel worse off in spite of the fact that his or her objective circumstances remained unchanged. The following reason is provided (Easterlin 1995:36): “This is because judgments of personal well-being are made by comparing one’s objective status with subjective living level norm, which is significantly influenced by the average level of living of the society as a whole. If living levels increase generally, subjective living level norm rises.” To put this Page | 16.

(28) Subjective Well-being | Remittances. in a more general perspective, an individual’s happiness varies directly with his or her own income and it also varies inversely to that of others (Easterlin 1995). On the other hand, according to the absolute income hypothesis, the level of utility varies positively with the level of income up to a certain threshold level of income. Beyond that threshold utility remains largely invariant to any further increases in income (Caporale, Georgellis, Tsitsianis & Ping Yin 2009). “This characteristic of utility reflects the assumption that once a person’s basic material needs are satisfied, the person’s sense of happiness is predominantly determined by other aspects of life rather than further improvement in material well-being” (Caporale et al., 2009:3). Diener (1984) explains the absolute theory to be that richer people are happier than those less well-off within the same society. This is because people with higher income levels are easily able to satisfy their basic needs such as food and housing and in turn, obtain a higher level of SWB (Fuentes & Rojas 2001). The last theory about SWB refers to the authentic happiness theory which is intended to account for long-term change in SWB and promote it (Petersen & Seligman 2004). According to Headey et al., (2008), the individual will only feel that life has meaning and that it will be satisfying in the long run when his or her goals (or priorities) are altruistic and are perceived to have intrinsic value. Seligman, Parks & Steen (2004) explain this theory as a high level of long-term SWB that stems from a life that has been characterised by aspects such as meaning, engagement and pleasure. The theories regarding SWB can be summarised in the following way: The set-point theory states that the long-term SWB of an adult is stable. According to the adaptation theory, an individual will adjust to certain circumstances such as job loss or serious illness. The relative income hypothesis explains that an individual measure his or her income in terms of that of other members of society. Absolute income, however, basically does not take the factors of society into account and is merely a reflection of the income earned. Section 2.3.1.1 will address ways in which either relative or absolute income affects SWB Page | 17.

(29) Subjective Well-being | Remittances. in more detail. Authentic happiness is the happiness a person perceives when he feels his life has meaning. In Section 2.3 various international and South African determinants of happiness will be discussed.. 2.3 Empirical literature review 2.3.1 Determinants of happiness Most people strive to be happy, and this might be seen as a vital goal for many. Literature on SWB states that an individual’s satisfaction with life is explained as a multi-dimensional concept (Neff 2006). It is also the more central concerns of self, family and livelihood that are associated with SWB. Many economists and psychologists aim to determine how a certain level of satisfaction could be obtained in terms of the manner in which a person leads his or her life. Happiness research aims to quantitatively ascertain what the relative importance of genetic, personality, socio-demographic, economic, cultural and political factors are (Frey, Stutzer, Benz, Meier, Luechinger & Benesch 2008).. The next section will address the various determinants of happiness. These determinants were found at an international level as well as for South Africa.. 2.3.1.1 Happiness and income The theory of happiness and income was first introduced by Richard Easterlin during the early 1970s when he developed the Easterlin Paradox. Here, although richer individuals are likely to be happier than poorer individuals at any particular point in time, societies may not become happier as they become richer over time (Reyes-Garcia, Babigumira, Pyhälä, Wunder, Zorondo-Rodrígues & Angelsen 2016). Easterlin developed this paradox by using data for the United States (USA) where the distinction was made. Page | 18.

(30) Subjective Well-being | Remittances. between happiness responses in a particular year to responses over time (Di Tella & MacCulloch 2005). Easterlin (1974) compared his findings to data on well-being and income across countries. He argued that such a comparison could assist in determining whether the strong relationship between well-being and income within countries reflected the advantages that were given by absolute or relative income (Sacks, Stevenson & Wolfers 2012). Some researchers have argued that there was a process of comparison where individuals wanted to “keep up with the Joneses.” They compared their material positions to that of relevant peers (Reyes-Garcia et al., 2016). This statement is a good example of the relative income theory. More recent studies include those done by Blanchflower and Oswald (2004) who conducted a study with data from the early 1970s to late 1990s. The aim of the study was to explore the economics of happiness on individuals in the USA and Great Britain. They found that relative income mattered. Akay and Martinsson (2008) used data from an extensive household survey which was conducted in Ethiopia in 2004 and 2005. Their aim was to investigate whether relative income did indeed matter to the extremely poor. This hypothesis was tested on individuals who lived in the rural areas of northern Ethiopia, one of the poorest regions in the world. Their results also showed that relative income had an impact on the SWB of these individuals. Clark and Oswald (1996) aimed to test the theory explaining that happiness depended on relative income. The data used in this analysis comes from the first wave of a random sample of roughly 10 000 individuals in approximately 5 500 British households that was collected in late 1991. Two main findings were reported by Clark and Oswald (1996). Firstly, the reported levels of well-being of the workers were at best poorly correlated in. Page | 19.

(31) Subjective Well-being | Remittances. terms of absolute income alone. Secondly, the comparison or relative income was significantly and negatively correlated with levels of happiness. D’Angelo and Zazzaro (2009) used data obtained in 2006 for the Survey of Household Income and Wealth (SHIW) in Italy in order to focus on an individual’s self-reported level of happiness. Here, a negative and non-linear relationship between relative income and happiness was found. Easterlin and his co-authors continue to accumulate data that support his original findings (relationship between income and well-being stems almost entirely from relative income) (Sack et al., 2012), though there is also an increase in literature that found different results. Thus, there is a consensus in the literature that absolute income should matter more to the SWB of people at low-income levels because that income could help the individuals to meet certain universal needs (Diener, Sandvik, Seidlitz & Diener 1993). Di Tella and MacCulloch (2006) used data from the Euro-Barometer Survey Series which interviewed a random sample of Europeans between 1975 and 1997. Their findings suggested that the happiness responses of the people surveyed were positively correlated with absolute income. A paper by Stevenson and Wolfers (2008) altogether reassessed the Easterlin Paradox by analysing multiple data sets on a broad array of countries. Their findings suggested that people who enjoyed better material circumstances, enjoyed greater levels of SWB, and that continued increases in their standard of living led to increases in their SWB. Their findings thus indicated that absolute income mattered more to SWB than relative income comparisons. Sacks et al., (2012) used data from the Gallup World Poll, which contained the most wide-ranging data that was available on well-being. The results showed that well-being rose with income. This was found irrespective of comparing people within a single country and year, and by looking across countries or by looking at economic growth for a given. Page | 20.

(32) Subjective Well-being | Remittances. country. These results suggest, in turn, that it is absolute income that determines well-being (Sacks et al., 2012). In a study that analysed SWB and income, Reyes-Garcia et al., (2016) found that absolute income had a positive effect on SWB. They used data from the Poverty Environment Network (PEN). The data was collected from 23 countries between 2005 and 2010. From a South African perspective, Hinks and Gruen (2005) found that household income, and specifically relative income, affected the happiness of individuals. They also found that absolute income played a role. Ebrahim, Botha and Snowball (2013) used data from the 2008 NIDS data set to test for differences in happiness among different race groups in South Africa, as well as to investigate the determinants of happiness for these race groups. The results from the study suggest that income is seen as an important determinant of happiness for all four race groups. However, relative income is more important in determining the happiness levels for Coloureds (Ebrahim et al., 2013).. 2.3.1.2 Happiness and age The relationship between age and SWB has led to some confusing and contradictory debates over the last couple of decades. Wilson’s (1967) article shows youth to be a consistent predictor of happiness, and that a negative relationship exists between happiness and age. Shmotkin (1989) used an Israeli sample of 447 community-dwelling people between the ages of 21 and 87. This study also found that SWB and age were negatively correlated. Furthermore, it was also found that all the measured aspects of SWB declined with progressive age. This conclusion is, however, challenged in later studies. According to Diener’s 1984 article there exists no relationship between age and SWB. This position was also supported by Costa, Zonderman, McCrae, Coroni-Huntley, Locke and Barbano in 1987. They found that total age showed no significant effect on well-being. Page | 21.

(33) Subjective Well-being | Remittances. However, in more recent studies the majority of researchers found a non-linear (U-shaped) relationship between SWB and age. A study by Gerdtham and Johannesson (1997) used a data set that consisted of a random sample of 5 000 individuals from the Swedish adult population to investigate the relationship between happiness and a variety of socio-economic variables such as age, gender, unemployment and urbanisation. They found that the relationship between age and happiness was U-shaped and that happiness was at its lowest in the 45 to 64 age group. The findings appear to have been supported by other researchers such as Clark (2002) who performed a study by examining nine waves of British panel data. Based on the results, a U-shaped relationship between SWB and age was confirmed. Graham and Felton (2005) conducted a study by making use of a norms-based explanation using happiness surveys. They found that by running a standard happiness regression, a U-shaped relationship between age and SWB existed. Clark and Oswald (2007) also noted that almost all studies on age and SWB reached a similar conclusion of happiness and age being U-shaped. They also found that the minimum point was in a range from the mid-30s until the late 40s. According to Conceição and Bandura (2008) a possible problem may exist in terms of the argument of the U-shaped relationship between SWB and age. Cohort effects may have been omitted because earlier generations may have been born in particularly good or bad times. Blanchflower and Oswald (2007) used data on 500 000 randomly sampled Americans and West Europeans to control for such cohort effects. They found a robust U-shaped relationship between age and SWB. Powdthavee (2003) used the 1993 data set of the South African Labour Development Research Unit (SALDRU) to look at happiness and the standard of living in South Africa. The results conformed to international literature that there was a U-shaped relationship Page | 22.

(34) Subjective Well-being | Remittances. between age and happiness in South Africa. Blaauw and Pretorius (2013) used the NIDS 2008 data set where they found a U-shaped relationship between age and happiness in South Africa.. However, in a paper that focused on whether the structure of happiness equations of people in South Africa tended to be the same or similar to those of developed countries, Hinks and Gruen (2005) used data from three of the Durban Quality of Life studies. The survey has been undertaken annually since 1998 but is not a panel. Their analysis found that age did not appear to play a role in happiness, and there was no strong evidence of a U-shaped relationship.. 2.3.1.3 Happiness and gender In the comparison between men and women, there are many obvious reasons why women should be less satisfied with their lives than men. Women perform unpaid work (household chores) for longer hours, receive lower wages, and they are still primarily grouped into less prestigious occupations (Senik 2015). Despite these unfavourable situations, women appear to be happier and more satisfied with their lives than men. Results from a number of researchers confirm that women are generally happier than men. Gerdtham and Johannesson (1997) conducted a study on 5 000 Swedish individuals in order to investigate the relationship between happiness and socio-economic variables. They found that women were happier than men. Oswald (1997) used the GSS of the USA to analyse happiness and economic performance. He found that women were happier than men. Blanchflower and Oswald (2004) also found that men reported lower happiness scores than women. Their paper studied SWB over time in the USA and Britain with the data stretching over a period from the early 1970s to the late 1990s.. Page | 23.

(35) Subjective Well-being | Remittances. Although women traditionally reported higher levels of happiness than men, Stevenson and Wolfers (2009) found that this was no longer the case, and in many instances women’s happiness levels were similar to those of men, or even lower. They examined men’s and women’s SWB in the USA by using data from the GSS. Moreover, Mishra and Smyth (2012) conducted a study which tried to determine whether SWB contributed toward a better understanding of the reasons for the existence of the gender wage gap in urban China. Their findings also indicated that SWB was higher for males than for females. Other recent studies found results different from those previously discussed. Joshi (2010) found that gender was not a determinant of SWB, and that males and females evaluated their lives in a similar manner. These results were obtained from a study on 196 employees from various organisations in the IT industry belonging to the Tri-city of Chandingarth, Mohali and Panchkula. Furthermore, Herbst (2011) found that men and women experienced similar declines in life satisfaction. These results were obtained by using novel data from the DDB Needham Life Style Survey in order to analyse evolution of women’s SWB over the last few decades. Data collection for this survey started during the mid-1970s with the aim of examining America’s consumer habits and social activities. Herbst (2011) examined the trends in life satisfaction from 1985 to 2005. For South Africa, a study of the NIDS data set by Ebrahim et al., (2013) revealed that South African women were generally less happy than men.. 2.3.1.4 Happiness and race When it comes to racial issues and policies or the consequences of the colour line, the general population rarely agree (Brown, Wallace & Williams 2001). The general population refers to individuals from different racial groups.. Page | 24.

(36) Subjective Well-being | Remittances. Beatty and Tuch (1997) used national survey data for the period between 1984 and 1994 to examine Black-White differences in life satisfaction of the middle-class. They found that Black respondents in the middle class reported lower levels of satisfaction than White middle-class respondents. According to Blanchflower and Oswald (2004), Black respondents in the USA appeared to be much less happy than White respondents. These results were obtained by using data from the GSS. Stevenson and Wolfers (2012) used data that was obtained from a nationally representative sample of 1 500 respondents in the USA on a yearly basis between 1972 and 1993 (except for 1979, 1981 and 1992). Thereafter, the survey continued every second year up to 2008 with a total of 3 500 respondents. They found that relative to White respondents, Black respondents reported much lower levels of SWB in the early 1970s. However, it was also found that although the racial gap in happiness among Black people still remained, it had declined over the last few decades (Stevenson & Wolfers 2012). Aldous and Ganey (1999) conducted a study on family life and the pursuit of happiness by looking at the influence on gender and race. They used data from the GSS for the years 1972 to 1993 which provided data that was used to examine the reported happiness of adults in the USA based on race and gender. As was expected, they found White respondents to be happier than Black respondents. According to Powdthavee (2003), the findings for South Africa suggested that non-economic factors such as race mattered more psychologically than income. This argument was further supported by Powdthavee (2004) who made use of the October Household Survey (OHS) 97 for South Africa and found that Black people reported significantly lower well-being scores than Coloured people. In the analysis conducted by Hinks and Gruen (2005) it was found that racial groups played an important part in determining the happiness of individuals in South Africa. Page | 25.

(37) Subjective Well-being | Remittances. Whites and Asians are significantly more likely to report being satisfied with their lives than Black respondents. An article aimed at testing differences in SWB between different race groups in South Africa, found that Black South Africans were the least happy among the racial groups in spite of the changes that had occurred since 1994 (Ebrahim et al., 2013). These results were obtained by making use of the 2008 NIDS data set. 2.3.1.5 Happiness and marital status There is quite a large amount of literature on marriage and SWB which stretches across a range of disciplines such as sociology, economics and psychology (Coombs 1991). Stutzer and Frey (2006) refer to marriage as being an important aspect that affects people’s lives and well-being because sexual relations are regulated by marital institutions which in turn encourage commitment between spouses. They also note that the commitment of being married may, for example, have positive effects on the health of spouses. In the 1988 analysis spanning the period from 1972 to1986 on the GSS data, Glenn and Weaver (1988) analysed the changing relationship of marital status on happiness. They found that the positive relationship between being married and happiness declined steadily between 1972 and 1986. This change occurred due to an increase in the reported happiness levels of men who have never been married paired with a decrease in the level of happiness of married females. Despite the initial findings by Glenn and Weaver (1988), more recent studies indicate that the happiness trends they observed did not continue. Frey and Stutzer (2005) used an extensive German Socio-Economic Panel (GSOEP) survey that looked at the effect of marriage on the SWB of a spouse to determine whether marriage made people happy or whether happy people were more likely to get married. Their results indicated that single people who knew they would eventually marry were happier than those who remained. Page | 26.

(38) Subjective Well-being | Remittances. single even when important observable socio-demographic characteristics were taken into account. Zimmermann and Easterlin (2006) also conducted a study on data from GSOEP spanning from 1984 to 2004. They found that the formation of unions (marriage) had a significant positive effect on SWB whereas the dissolution of unions (separation or divorce) had a significant negative effect on SWB. In addition to this, they found that there was an additional boost in SWB in the year of marriage as well as the following year. This is referred to the “honeymoon period” effect (Zimmermann & Easterlin 2006). By using the 1997 OHS data set Powdthavee (2004) found that people who were in civil marriages in South Africa were significantly happier than people who had never been married. Furthermore, divorced or separated individuals reported the lowest levels of well-being. Botha and Booysen (2011) used data from the 2008 NIDS to test for differences in reported happiness between married and cohabiting people in South Africa. This analysis found evidence that suggested that married people became happier at a later stage of their relationship than cohabitants who were happy initially. However, other studies that focused on South Africa recorded different results. By making use of SALDRU’s data set of 1993, Powdthavee (2003) found that there was no significant evidence that marital status had an impact on the happiness of people. Hinks and Gruen (2005) found that there was no evidence showing that there was a relationship between marital status and happiness.. 2.3.1.6 Happiness and height Some articles point out aspects of life where taller people might experience some advantages to those individuals who are shorter. For example, Nettle (2002) stated that tall people (men in general) were more likely to have greater reproductive success and have children with a long-term partner than men of average height. Page | 27.

(39) Subjective Well-being | Remittances. Making use of data from the daily polling of Gallup-Healthways Well-being Index which collects data from telephone surveys of the American population, Deaton and Arora (2009) found that on average, taller people tended to live better lives. This is because they are more likely to report a range of positive emotions such as enjoyment and happiness and they also evaluate their lives more favourably. It has also been suggested that taller people seemed to do better when it came to political competitions such as elections. When it comes to USA presidential elections over the past one hundred years, it was found that taller candidates received more popular votes 88.0% of the time. The taller candidate also won the elections 84.0% of the time (Sorokowski 2010). Carrieri and de Paola (2011) conducted an investigation on data from the last Italian Health Conditions Survey for the years 2004 to 2005, which provided information on happiness scores and individual height. They found that the well-being of men seemed to be increasing when their height increased compared with the average height of individuals who were in their reference group. Denny (2010) used data from a cross-country representative sample of Europeans who were over the age of 50 to analyse whether an individual’s height could be associated with higher or lower levels of well-being. The results showed that for SWB, height did not appear to be important as the effects were small in magnitude. The analysis by Blaauw and Pretorius (2013) also found that height was not significant in explaining well-being in the large sample of South African individuals. Thus, taller people were not found to be happier people.. 2.3.1.7 Happiness and BMI Many people who are overweight tend to report low levels of SWB (Berger 2004). This could be the result of anti-fat biases and socio-cultural considerations.. Page | 28.

(40) Subjective Well-being | Remittances. Linna, Kaprio, Raevouri, Sihvola, Keski-Rahkonen and Rissanen (2013) conducted a study on Body Mass Index (BMI) and SWB in young adults who were twins. They used data from the FinnTwin16 nationwide longitudinal cohort study to explore the health behaviour of twins and their families. A total of 2 151 men and 2 422 women were used in the analysis. Based on the results, lean men reported lower levels of SWB than obese men, whilst obese women reported lower levels of SWB than lean women.. Brdarić, Jovanović and Gavrilov Jerković (2015) conducted a study on 731 Serbian respondents to determine the relationship between BMI and SWB. They found that the moderating effect of body dissatisfaction in the relationship between BMI and SWB was significant for both men and women. On the other hand, Clark and Etilé (2010) used data from three waves of GSOEP which collected data at household and individual levels to determine the relationship between SWB and BMI in couples. They found that when an individual’s partner is heavier, the negative impact of BMI on SWB tended to be lower. In order to examine the link between weight, height and SWB in China, Lee and Zhao (2015) used data from the Survey on Rural Urban Migration in China (RUMiC). They found that big and tall men and women reported higher levels of SWB in the rural and migrant sample. They also did not find a well-being penalty for being obese among urban men. In a paper that explored the possible determinants of SWB in South Africa, Blaauw and Pretorius (2013) used data from the first wave of NIDS to test the effect of a BMI higher than 30 on SWB. They found that the relationship between being obese and SWB was negative although the effect was not statistically significant.. Page | 29.

(41) Subjective Well-being | Remittances. 2.3.1.8 Happiness and religion Diener et al., (1999) explained that religious experiences could provide psychological and social benefits. This was because religiousness had the ability to provide people with a sense of meaning in their daily lives. Witter, Stock, Okun and Haring (1985) made use of a meta-analysis of 28 studies. They found that in the most of these studies, religion had a positive effect on SWB. Headey et al., (2008) used data from GSOEP with the aim of linking the authentic happiness theory with that of the set-point theory and long-term SWB. This was done by analysing the effects of religious beliefs and activities. The results from this analysis showed that individuals who became more religious recorded long-term gains in life satisfaction over time, whereas those who became less religious recorded long-term losses in life satisfaction. Lim and Putnam (2010) used data from a panel survey of a representative sample of adults in the USA from 2006 to 2007 in the Faith Matters Study to try and understand how and why religion affected SWB. They found that religious people were more satisfied with their lives. This was because people attended religious services on a regular basis and they built social networks in their congregations. Steiner, Leinert and Frey (2010) conducted an analysis for Switzerland by using the Swiss Household Panel for the year 2007. This analysis found that the effect of church-going on happiness was fairly significant. Snoep (2008) used data from the World Values survey in 2000 for the USA, Netherlands and Denmark. The results showed a positive but weak correlation between religion and happiness. “Apparently religiousness is not always a blessing” (Snoep 2008:207). Blaauw and Pretorius (2013) explained that the role played by religion was one determinant that had not received a great deal of attention in terms of South African studies. This study used data from the first wave (2008) of NIDS to analyse the Page | 30.

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