IS THE STRUCTURE OF HAPPINESS EQUATIONS
THE SAME IN POOR AND RICH COUNTRIES?
THE CASE OF SOUTH AFRICA
Nattavudh Powdthavee
No 675
WARWICK ECONOMIC RESEARCH PAPERS
DEPARTMENT OF ECONOMICS
Is the Structure of Happiness Equations
the Same in Poor and Rich Countries?
The Case of South Africa
Nattavudh Powdthavee*
University of Warwick,
April, 2003
Abstract
Are happiness patterns structurally the same when comparing poor and rich
countries? Using cross-sectional data from the SALDRU93 survey, we show that the
relationships between subjective well-being and socioeconomic variables have a
similar structure and is U-shaped in age in South Africa as in developed countries.
Well-being rises with income. Unemployment is detrimental to reported well-being,
both at the individual- and household-level. Living standard indicators such as
durable assets ownership seem to determine happiness levels as well as income.
Relative income also matters to well-being, after controlling for community wealth.
(90 words)
JEL Classification: D10, I31, J10, O10, O55
Keywords: Happiness, Living Standard, South Africa, Poverty
Approximate Word Count: 9,600 words
* Address: Department of Economics, University of Warwick, Coventry, UK, CV4 7AL. Telephone: +44 2476
28240. E-mail: N.Powdthavee@warwick.ac.uk. I am grateful to Andrew Oswald, Jeff Round, Carol Graham, Peter
Law, Norman Ireland, Robin Naylor, Rea Lydon, Jonathan Gardner, Pedro Martins, Alexandros Zangelidis ,
Maureen Paul. Helpful comments were also received during presentations at Warwick University, the RES Easter
School (2002), and the Paradoxes of Happiness Conference in Milan (2003). The usual disclaimer applies.
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^49` Iudqn/ Urehuw K1 Fkrrvlqj wkh Uljkw Srqg= Kxpdq Ehkdylrxu dqg wkh Txhvw iru
Vwdwxv/ R{irug Xqlyhuvlw| Suhvv/ 4<;81
^4:` bbbbb/ Iudphv ri Uhihuhqfh dqg wkh Txdolw| ri Olih/ Dphulfdq Hfrqrplf Uhylhz
:< +5, 4<;<= ;30;81
^4;` Iuh|/ Euxqr dqg Dorlv Vwxw}hu Kdsslqhvv/ Hfrqrplfv/ dqg Lqvwlwxwlrqv/ Hfrqrplf
Mrxuqdo 443 5333= <4;06;1
^4<` Jhugwkdp/ Xoi J1 dqg Pdjqxv Mrkdqqhvvrq/ Wkh Uhodwlrqvkls ehwzhhq Kdsslqhvv/
Khdowk dqg Vrflr0hfrqrplf Idfwruv= Uhvxowv edvhg rq Vzhglvk Plfur Gdwd/ Mrxuqdo ri
Vrflr0Hfrqrplfv 63 5334= 88608:1
^53` Judkdp/ Fduro/ Fudiwlqj Vxvwdlqdeoh Vrfldo Frqwudfwv lq Odwlq Dphulfd= Srolwlfdo
Hfrqrp|/ Sxeolf Dwwlwxghv/ dqg Vrfldo Srolf|/ Fhqwhu rq Vrfldo dqg Hfrqrplf G|0
qdplfv Zrunlqj Sdshu Vhulhv &5</ Eurrnlqjv Lqvwlwxwlrq/ 5335/ pdqxvfulsw1
^54` Judkdp/ Fduro dqg Vwhidqr Shwwlqdwr/ Kdsslqhvv/ Pdunhwv/ dqg Ghprfudf|= Odwlq
Dphulfd lq Frpsdudwlyh Shuvshfwlyh/ Mrxuqdo ri Kdsslqhvv Vwxglhv 6 5334= 56:09;1
64
^55` bbbbb/ Kdsslqhvv dqg Kdugvkls= Rssruwxqlw| dqg Lqvhfxulw| lq Qhz Pdunhw
Hfrqrplhv/ Eurrnlqjv Lqvwlwxwlrq Suhvv/ 53351
^56` Nlqjgrq/ Jhhwd dqg Mrkq E1 Nqljkw/ Xqhpsor|phqw lq Vrxwk Diulfd= wkh qdwxuh ri wkh
ehdvw/ Fhqwhu iru wkh Vwxg| ri Diulfdq Hfrqrplhv= Xqlyhuvlw| ri R{irug/ pdqxvfulsw/
53341
^57` Nodvhq/ Vwhyhq Sryhuw|/ Lqhtxdolw|/ dqg Ghsudydwlrq lq Vrxwk Diulfd= Dq Dqdo|vlv ri
Wkh 4<<6 VDOGUX Vxuyh|/ Vrfldo Lqglfdwruv Uhvhdufk174 4<<:= 840<71
^58` Nqljkw/ Mrkq E1 dqg P1G1 PfJudwk Dq Dqdo|vlv ri udfldo zdjh glvfulplqdwlrq lq Vrxwk
Diulfd/ R{irug Exoohwlq ri Hfrqrplfv dqg Vwdwlvwlfv 6< 4<::= 5780:41
^59` Ohonhv/ Ruvro|d Wdvwlqj iuhhgrp= Kdsslqhvv/ Uholjlrq dqg Hfrqrplf Wudqvlwlrq/ Fhq0
wuh iru Dqdo|vlv ri Vrfldo H{foxvlrq= Orqgrq Vfkrro ri Hfrqrplfv/ pdqxvfulsw/ 53351
^5:` O|grq/ Uhdprqq dqg Duqdxg Fkhydolhu Hvwlpdwhv ri wkh Hhfw ri Zdjhv rq Mre Vdw0
lvidfwlrq/ Fhqwhu iru Hfrqrplf Shuirupdqfh= Glvfxvvlrq Sdshu &3864/ Orqgrq Vfkrro
ri Hfrqrplfv/ 53341
^5;` Pdqvnl/ Fkduohv I1 Lghqwlfdwlrq ri Hqgrjhqrxv Vrfldo Hhfwv= Wkh Uh hfwlrq Sure0
ohp/ Uhylhz ri Hfrqrplf Vwxglhv 93 4<<6= 8640751
^5<` PfEulgh/ Plfkdho M1 Uhodwlyh Lqfrph Hhfwv rq Vxemhfwlyh Zhoo0Ehlqj lq wkh Furvv0
vhfwlrq/ Mrxuqdo ri Hfrqrplf Ehkdylrxu dqg Rujdql}dwlrq 78 5334= 5840:;1
^63` Proo/ Shwhu J1/ Glvfulplqdwlrq djdlqvw frorxuhg shrsoh lq Vrxwk Diulfd/ 4<:3 wr 4<;3/
Mrxuqdo ri Ghyhorsphqw Hfrqrplfv 6: 4<<3= 5;<063:1
^64` Pûoohu/ Ydohulh Txdolw| ri Olih lq Vrxwk Diulfd= Srvw0Dsduwkhlg Wuhqgv/ Vrfldo Lqgl0
fdwruv Uhvhdufk 76 4<<;= 5:09;1
^65` Prudzhw}/ Gdylg hw do Lqfrph Glvwulexwlrq dqg Vhoi0Udwhg Kdsslqhvv= Vrph Hpslulfdo
Hylghqfh/ Hfrqrplf Mrxuqdo ;: 4<::= 8440551
65
^66` Prxowrq/ Euhqw U1 Dq Looxvwudwlrq ri d Slwidoo lq Hvwlpdwlqj wkh Hhfwv ri Djjuhjdwh
Yduldeohv rq Plfur Xqlwv/ Uhylhz ri Hfrqrplfv dqg Vwdwlvwlfv :5 +5, 4<<3= 66706;1
^67` Qdpd}lh/ Fhhpd dqg Shwhu Vdqih| Kdsslqhvv dqg Wudqvlwlrq= Wkh Fdvh ri N|uj}vwdq/
Uhylhz ri Ghyhorsphqw Hfrqrplfv 8 5334= 6<507381
^68` Rvzdog/ Dqguhz M1 Kdsslqhvv dqg Hfrqrplf Shuirupdqfh/ Hfrqrplf Mrxuqdo 43:
4<<:= 4;480641
^69` Udydoolrq/ Pduwlq dqg Plfkdho Ornvklq Lghqwli|lqj Zhoiduh Hhfwv iurp Vxemhfwlyh
Txhvwlrqv/ Hfrqrplfd 9; 5334= 66808:
^6:` bbbbb/ Vhoi0Udwhg Hfrqrplf Zhoiduh lq Uxvvld/ Hxurshdq Hfrqrplf Uhylhz 79
5335= 47860:61
^6;` Vfkuhlqhu/ Pdun hw do Udfldo Glvfulplqdwlrq lq Kluh2Sxufkdvh Ohqglqj lq Dsduwkhlg
Vrxwk Diulfd/ Ghyhorsphqw Vrxwkhuq Diulfd 46 4<<9= ;7:0931
^6<` Vhq/ Dpduw|d Srru/ Uhodwlyho| Vshdnlqj/ R{irug Hfrqrplf Sdshuv 68 4<;6= 48609<1
^73` Vwxw}hu/ Dorlv Wkh Uroh ri Lqfrph Lqvsludwlrqv lq Lqglylgxdo Kdsslqhvv/ Lqvwlwxwh iru
Hpslulfdo Uhvhdufk lq Hfrqrplfv= Xqlyhuvlw| ri ]xulfk/ pdqxvfulsw/ 53351
^74` Wkhrgrvvlrx/ Lrdqqlv Wkh hhfwv ri Orz Sd| dqg Xqhpsor|phqw rq Sv|fkrorjlfdo
Zhoo0ehlqj= D Orjlvwlf Uhjuhvvlrq Dssurdfk/ Mrxuqdo ri Khdowk Hfrqrplfv 4: 4<<;=
;804371
^75` Wrphv/ Qljho Lqfrph Glvwulexwlrq/ Kdsslqhvv dqg Vdwlvidfwlrq= D Gluhfw Whvw ri wkh
Lqwhughshqghqw Suhihuhqfhv Prgho/ Mrxuqdo ri Hfrqrplf Sv|fkrorj| : 4<;9= 7580791
^76` ydq gh Vwdgw/ Kxle/ Dulh Ndswh|q dqg Vdud ydq gh Jhhu/ +4<;8, Wkh Uhodwlylw| ri
Xwlolw|= Hylghqfh iurp Sdqho Gdwd/ Uhylhz ri Hfrqrplfv dqg Vwdwlvwlfv 9: 4<;8= 4:<0
;:1
66
^77` Zduu/ Shwhu +4<<3, Wkh Phdvxuhphqw ri Zhoo0Ehlqj dqg Rwkhu Dvshfwv ri Phqwdo
Khdowk/ Mrxuqdo ri Rffxsdwlrqdo Sv|fkrorj| 96 4<<3= 4<605431
^78` Zlovrq/ Zduqhu +4<9:, Fruuhodwhv ri Dyrzhg Kdsslqhvv/ Sv|fkrorjlfdo Exoohwlq/
Yro19:/ s15<706391
67
Table 1: The Distribution of Perceived Quality of Life (PQOL) responses
in South Africa (1993)
Whole Sample
Observations
Percentage
Cumulation
Very Dissatisfied
1817
24.23%
24.23%
Dissatisfied
2431
32.42%
56.65%
Neither
707
9.43%
66.08%
Satisfied
1981
26.42%
92.49%
Very Satisfied
563
7.51%
100.00%
Total
7499
100%
100%
Table 1a: The Distribution of Happiness Responses in the United States: 1972 - 1994
Happiness in USA
Percentage
Not Too Happy
11.55%
Pretty Happy
55.79%
Very Happy
32.66%
Total
100%
Table 1b: The Distribution of Life Satisfaction Responses in Europe: 1975 - 1992
Life Satisfaction in Europe
Percentage
Not At All Satisfied
4.80%
Not Very Satisfied
14.19%
Fairly Satisfied
53.72%
Very Satisfied
27.29%
Total
100%
Source: The reported happiness levels in US and life satisfaction in Europe are taken from Di Tella et al (2001).
Note: The Perceived Quality of Life (PQOL) question was “Taken everything into account, how satisfied is this household
with the way it lives today?” There are five possible answers, with the lowest well-being response being ‘very dissatisfied’
and the highest being ‘very satisfied’. Note also that people from US and European nations are more likely to give higher
well-being response levels (i.e. a positive skew towards “Very Happy” and “Very Satisfied”) than South African population
(i.e. a negative skew of perception towards “Very Dissatisfied” rather than “Very Satisfied”).
i
Table 2: Happiness Equations with Household Variables for South Africa
(Ordered Probit), 1993
(1)
Race of Household
Coloured
Indian
White
Durable Goods
Motor Vehicle
Bicycle
Electric Stove
Electric Kettle
Fridge
Gas Cooker
Geyser
Primus Cooker
Radio
Telephone
TV
Rural/Urban
Urban (=1)
HHSize (members)
Log of Household Monthly Income
(2)
0.359
(2.74)***
0.428
(3.24)***
0.639
(4.76)***
0.355
(2.64)***
0.377
(3.02)***
0.648
(4.91)***
0.465
(3.50)***
0.560
(4.53)***
0.764
(5.76)***
0.080
(2.73)***
0.024
(1.26)
-0.033
(-0.58)
0.027
(0.46)
0.001
(0.03)
0.010
(0.27)
0.206
(3.32)***
0.084
(2.84)***
0.020
(1.03)
-0.046
(-0.81)
0.005
(0.09)
0.009
(0.28)
0.002
(0.04)
0.189
(3.03)***
0.203
(2.24)**
0.133
(1.55)
-0.216
(-1.75)*
-0.125
(-0.83)
-0.055
(-0.56)
-0.114
(-0.81)
0.297
(1.86)*
-0.008
(-0.27)
0.023
(1.33)
0.153
(3.38)***
0.045
(1.41)
-0.012
(-0.45)
0.017
(0.99)
0.165
(3.74)***
0.026
(0.77)
0.018
(0.17)
-0.030
(-0.61)
0.302
(2.94)***
0.231
(2.38)**
-0.195
(-2.60)***
-0.041
(-3.54)***
0.132
(6.54)***
-0.171
(-2.31)**
-0.035
(-3.23)***
0.114
(4.88)***
-0.154
(-2.01)**
0.006
(0.67)
0.156
(4.84)***
0.498
(9.34)***
0.476
(10.68)***
-0.013
(-1.07)
0.493
(9.41)***
0.486
(10.92)***
-0.015
(-1.11)
Parental Wealth Comparisons
PWealth: Same as Parents
PWealth: Richer than Parents
Relative Income
N
Log-Likelihood
Pseudo^2
Per Capita Variables
7499
-10082.028
0.0935
7499
-9912.1554
0.1088
7499
-9910.8806
0.1089
Note: * 10% C.I., ** 5% C.I., *** 1% C.I. (z-values in parentheses). Relative income = household monthly income/average
community household monthly income. Cluster controls are types of community roads, public transports (yes/no),
provinces (9), and cluster food prices. Reference variables are: Black (Race), Rural (Rural/Urban), and Pwealth - Poorer than
Parents (Parental Wealth Comparisons). Underlined variables become per capita variables in column (1) & (2), namely, log
of household monthly income per capita, durable goods per capita, and relative income per capita = household monthly
income per capita/average community household monthly income per capita.
ii
Table 3: Happiness Equations with Personal Variables at Individual level
and at Household level averaged data for South Africa
At Individual level
At Household level
0.000
(0.01)
0.085
(0.67)
0.347
(2.57)***
0.384
(3.14)***
0.644
(5.13)***
0.372
(2.76)***
0.387
(3.23)***
0.602
(4.69)***
0.040
(0.80)
-0.112
(-2.09)**
-0.087
(-1.58)
-0.124
(-2.20)**
-0.009
(-0.13)
0.122
(1.54)
-0.116
(-1.17)
-0.002
(-0.02)
0.070
(0.79)
0.282
(2.63)***
0.159
(3.93)***
0.220
(3.54)***
0.282
(4.56)***
0.387
(3.33)***
-0.091
(-1.13)
0.029
(0.45)
0.117
(1.73)*
-0.021
(-0.19)
0.313
(3.44)***
0.318
(3.78)***
0.087
(2.91)***
0.016
(0.82)
-0.040
(-0.71)
0.002
(0.03)
0.026
(0.89)
0.017
(0.44)
0.192
(3.12)***
0.002
(0.09)
0.016
(0.97)
0.076
(2.57)***
0.024
(1.14)
-0.042
(-0.77)
-0.004
(-0.08)
0.015
(0.51)
0.002
(0.06)
0.188
(3.08)***
-0.005
(-0.19)
0.018
(1.04)
Gender
Male (=1)
Race of Household
Coloured
Indian
White
Education Level
STD 1-3
STD 4-6
STD 7-8
STD 9-10
STD 10 or Higher
Employment Status
Housewife/Formal Education
Regular Wage Employment
Casual Wage Employment
Self-employed
Retired
Durable Goods
Motor Vehicle
Bicycle
Electric Stove
Electric Kettle
Fridge
Gas Cooker
Geyser
Primus Cooker
Radio
Telephone
TV
Rural/Urban
iii
0.175
0.158
(3.78)***
(3.48)***
0.037
0.035
(1.14)
(1.08)
Rural/Urban
Urban (=1)
HHSize (members)
Log of Household Monthly Income
-0.137
-0.139
(-1.85)*
(-1.89)*
-0.028
-0.024
(-3.74)***
(-3.34)***
0.091
0.065
(4.30)***
(2.80)***
Parental Wealth Comparisons
PWealth: Same as Parents
PWealth: Richer than Parents
0.481
0.480
(9.36)***
(9.40)***
0.469
Relative Income
Age
Age^2/100
0.465
(10.52)***
(10.71)***
-0.009
-0.008
(-0.82)
(-0.64)
-0.025
-0.011
(-3.52)***
(-2.19)**
0.025
0.016
(3.39)***
(2.55)**
-0.013
0.004
(-0.21)
(0.03)
Sick for the last 2 weeks?
Yes (=1)
N
Log-Likelihood
Pseudo^2
7499
7499
-9866.9079
-9854.8809
0.1129
0.1140
Note: Relative income = household monthly income/average community household monthly income.
Personal control is the relationship of the PQOL respondent to head of the household (48% of whom responded were
resident heads, 33% were wives or husbands or partners, 13% were sons or daughters, and the rest were other family
members). Cluster controls are the same as in table 1. Additional reference variables are: Female (Gender), No Education
(Education level), Unemployment (Employment status), No (Sick for the last 2 weeks?).
Personal controls at the individual-level represent personal variables for the PQOL respondents only, whilst personal
controls at the household-level represent average personal variables across all household members, including the PQOL
respondent from each household (e.g. the age variable at the individual-level now takes the form of an average age across
all household members, or from no formal education to the proportion of household members with no formal education in
the regression at the household level, etc.)
iv
Table 4: Happiness Equation with Personal Variables at the Individual level
and Personal Controls for Other Members in the Household
Gender
Male (=1)
Proportion of other Male members in the HH
Race of Household
Coloured
Indian
White
Education Level
STD 1-3
STD 4-6
STD 7-8
STD 9-10
STD 10 & Higher
Prop. of other HH members with STD 1-3
Prop. of other HH members with STD 4-6
Prop. of other HH members with STD 7-8
Prop. of other HH members with STD 9-10
Prop. of other HH members with STD 10 & Higher
Employment Status
Housewife/Formal Education
Regular Wage Employment
Casual Wage Employment
Self-employed
Retired
Prop. of other Housewife/Formal Education in HH
Prop. of other Regular Wage Employment in HH
Prop. of other Casual Wage Employment in HH
Prop. of other Self-employed in HH
Prop. of other Retired members in HH
v
(1)
(2)
0.021
(0.51)
0.087
(1.57)
-0.020
(-0.41)
0.064
(0.78)
0.331
(2.47)***
0.332
(2.85)***
0.556
(4.50)***
0.374
(2.78)***
0.398
(3.28)***
0.619
(4.97)***
0.032
(0.60)
-0.078
(-1.54)
-0.102
(-1.70)*
-0.136
(-2.18)**
-0.025
(-0.33)
0.081
(1.15)
0.018
(0.35)
-0.115
(-2.27)**
-0.112
(-1.98)**
-0.112
(-2.89)***
-0.058
(-0.80)
0.102
(1.55)
0.016
(0.20)
0.000
(0.00)
0.147
(1.68)*
0.190
(1.71)*
-0.009
(-0.11)
0.081
(0.98)
0.179
(2.30)**
0.210
(2.24)**
0.143
(3.44)***
0.161
(3.45)***
-0.090
(-0.99)
-0.025
(-0.34)
0.099
(1.31)
0.157
(3.14)***
0.069
(1.25)
-0.072
(-0.76)
0.363
(3.84)***
0.130
(1.75)*
0.131
(3.27)***
0.202
(3.61)***
-0.066
(-0.81)
-0.047
(-0.66)
0.090
(1.22)
0.169
(3.44)***
0.147
(2.03)**
0.010
(0.12)
0.319
(3.51)***
0.174
(2.41)**
Durable Goods
Motor Vehicle
Bicycle
Electric Stove
Electric Kettle
Fridge
Gas Cooker
Geyser
Primus Cooker
Radio
Telephone
TV
Rural/Urban
Urban (=1)
HHSize (members)
Log of Household Monthly Income
Parental Wealth Comparisons
PWealth: Same as Parents
PWealth: Richer than Parents
Relative Income
Age
Age^2/100
Average Age of other HH members
Average Age^2/100 of other HH members
Sick for the last 2 weeks?
Respondent: Yes (=1)
Other members in the HH: Yes (=1)
N
Log-Likelihood
Pseudo^2
0.072
(2.30)**
0.037
(1.91)*
0.002
(0.04)
-0.016
(-0.32)
0.052
(1.78)*
0.039
(1.13)
0.188
(3.56)***
0.010
(0.40)
0.022
(1.23)
0.151
(3.43)***
0.024
(0.80)
0.081
(2.76)***
0.032
(1.56)
-0.042
(-0.75)
-0.001
(-0.02)
0.026
(0.90)
0.011
(0.30)
0.193
(3.17)***
0.001
(0.04)
0.014
(0.85)
0.172
(3.71)***
0.040
(1.27)
-0.189
(-2.59)***
-0.131
(-1.76)*
-0.019
(-2.84)***
0.119
(5.39)***
-0.013
(-2.01)**
0.073
(3.23)***
0.404
(10.05)***
0.456
(11.20)***
-0.008
(-0.76)
-0.014
(-2.03)**
0.013
(1.85)*
-0.009
(-1.91)*
0.015
(2.72)***
0.476
(9.42)***
0.462
(10.65)***
-0.007
(-0.58)
-0.027
(-3.59)***
0.025
(3.23)***
-0.000
(-0.08)
0.006
(0.98)
-0.056
(-0.72)
-0.022
(-0.26)
-0.026
(-0.34)
0.016
(0.18)
6372
-8220.8744
0.1249
7499
-9835.0735
0.1157
Note: Personal and cluster controls as in table 2. Household level averaged data for ‘other’ household members consist of
average personal variables taken from all household members, excluding the PQOL respondent from each household.
column (1) consists only of HHSize > 1 sample, whilst column (2) includes also the household level averaged data taken
from PQOL respondents from households with HHSize = 1.
vi
Table 5: Valuations in Household Monthly Income of Life Events
Income = R100 per month
Compensation Income per Month
Unemployment to Reg. Wage Emp.
R1,491.28
Poorer to Richer than Parents
R55,946.52
Black to White
R481,381.09
Income = R2,064 (Avg. HH income)
Compensation Income per Month
Unemployment to Reg. Wage Emp.
R30,780.00
Poorer to Richer than Parents
R1,154,736.14
Black to White
R9,935,705.74
Note: £1 = R4.89 on average in 1993. (Source: Quinn Consultant FX rate:
http://www.quinns.com.au/accountant/tax\_table/foreign). (Document last viewed: April, 2003).
Table 6: Selected Marginal Effects
Dissatisfied
Neither
Satisfied
Increase motor vehicle by 1
-2.52%
+0.59%
+1.93%
Increase motor vehicle by 2
-5.18%
+1.15%
+4.02%
Increase motor vehicle by 3
-7.96%
+1.69%
+6.27%
Increase telephone by 1
-5.49%
+1.22%
+4.27%
Increase telephone by 2
-11.54%
+2.31%
+9.24%
Increase telephone by 3
-18.04%
+3.19%
+14.86%
Increase household size by 1
+0.40%
-0.10%
-0.30%
-0.3
Increase household size by 2
+0.78%
-0.19%
-0.59%
-0.5
Increase household size by 3
+1.17%
-0.29%
-0.88%
-0.8
Increase income by Y*exp^1 (= +R1,658.61)
-2.25%
+0.53%
+1.72%
Increase income by Y*exp^2 (= +R6,167.18)
-4.61%
+1.04%
+3.57%
Increase income by Y*exp^3 (= +R18,422.74)
-7.08%
+1.53%
+5.55%
Note: The marginal effects are calculated at the sample means of all variables estimated in table 4. The figures represent
shifts in the probability between people reporting to be in (i) Dissatisfied (1,2), (ii) Neither (3), (iii) Satisfied (4,5) category as
a result of changes in values of the selected variables. The (absolute) average motor vehicle ownership in the sample = 0;
average telephone ownership = 0; average household size = 4. Average log income = 6.87241 (or around R965.27).
vii
Table 7a: Happiness Equations with Controls for Other Members in the Household
for Different Groups of People in South Africa
Black
Non-Black
Rural
Urban
Male
-0.035
-0.010
0.086
(-0.61)
(-0.13)
(1.27)
-0.133
-0.010
0.347
0.511
(-0.85)
(-0.04)
(2.40)**
(3.07)***
-0.041
0.903
0.307
(-0.30)
(1.17)
(2.37)**
(Reference)
0.423
0.512
(1.24)
-0.019
Female
Age<30
Age=>30
-0.112
-0.125
0.030
(-1.95)*
(-1.86)*
(0.53)
0.267
0.531
0.309
(1.77)*
(2.80)***
(2.05)**
0.617
0.245
0.360
0.366
(3.58)***
(1.78)*
(2.18)**
(2.68)***
0.728
0.539
0.755
0.518
(3.61)***
(4.99)***
(3.44)***
(3.81)***
(3.90)***
0.058
0.058
-0.001
0.191
-0.000
Gender
Male (=1)
Race of Household
Coloured
Indian
White
Education Level
STD 1-3
0.011
-0.145
(0.21)
(-0.91)
(-0.31)
(0.65)
(0.63)
(-0.02)
(1.54)
(-0.01)
STD 4-6
-0.132
-0.145
-0.058
-0.191
-0.156
-0.086
-0.000
-0.119
(-2.34)**
(-1.24)
(-0.95)
(-2.32)**
(-1.65)*
(-1.58)
(-0.00)
(-2.09)**
STD 7-8
-0.107
-0.156
0.033
-0.211
-0.145
-0.106
0.069
-0.152
(-1.56)
(-1.41)
(0.40)
(-2.47)**
(-1.46)
(-1.65)*
(0.57)
(-2.31)**
STD 9-10
-0.146
-0.238
-0.196
-0.192
-0.242
-0.128
0.032
-0.216
(-1.95)**
(-2.31)**
(-2.11)**
(-2.18)**
(-2.41)**
(-1.86)*
(0.28)
(-2.97)***
0.001
-0.124
0.052
-0.072
(-1.32)
(0.37)
(-0.89)
STD 10 or Higher
-0.395
-0.002
-0.238
-0.055
(-3.33)***
(-0.22)
(-1.62)
(-0.59)
(0.01)
Employment Status
Housewife/Formal Education
Regular Wage Employment
0.143
0.019
0.122
0.413
0.041
0.132
0.043
0.185
(3.27)***
(0.50)
(2.57)***
(3.55)***
(0.32)
(2.88)***
(0.65)
(3.30)***
0.502
0.052
0.137
0.309
0.210
0.154
0.194
0.220
(3.70)***
(0.43)
(1.29)
(3.07)***
(2.60)***
(2.55)**
(1.76)*
(3.84)***
-0.105
0.045
-0.151
0.151
-0.122
0.026
0.031
-0.056
(-1.08)
(0.25)
(-1.18)
(1.12)
(-0.89)
(0.26)
(0.17)
(-0.58)
Self-Employment
0.049
-0.323
-0.190
0.333
-0.109
0.014
0.278
-0.108
(0.56)
(-2.30)**
(-1.76)*
(3.31)***
(-0.86)
(0.15)
(1.71)*
(-1.36)
Retired
0.027
0.222
0.114
0.345
0.115
0.118
0.128
(0.32)
(1.27)
(1.14)
(2.68)***
(0.83)
(1.32)
(1.65)*
0.142
0.026
0.013
0.106
0.056
0.086
0.030
0.100
(3.28)***
(0.67)
(0.29)
(2.91)***
(1.22)
(2.12)**
(0.52)
(3.13)***
0.037
0.061
-0.033
0.057
0.029
0.035
-0.012
0.048
(0.94)
(2.49)**
(-0.88)
(2.44)**
(0.88)
(1.22)
(-0.27)
(2.20)**
-0.048
0.054
-0.023
-0.039
-0.016
-0.049
-0.078
-0.023
(-0.67)
(0.70)
(-0.25)
(-0.58)
(-0.20)
(-0.70)
(-0.90)
(-0.37)
0.032
-0.007
0.072
-0.014
-0.057
0.024
0.008
-0.008
(0.37)
(-0.10)
(0.52)
(-0.22)
(-0.69)
(0.33)
(0.09)
(-0.13)
Fridge
0.011
0.016
0.045
0.035
-0.003
0.032
-0.002
0.033
(0.25)
(0.39)
(0.97)
(1.01)
(-0.06)
(0.89)
(-0.03)
(0.98)
Gas Cooker
0.051
0.008
0.068
-0.006
-0.025
0.048
0.051
0.007
(0.93)
(0.15)
(1.24)
(-0.12)
(-0.40)
(0.99)
(0.63)
(0.18)
0.198
0.204
0.367
0.153
0.301
0.104
0.443
0.133
(1.51)
(3.85)***
(2.49)**
(2.34)**
(3.64)***
(1.30)
(3.97)***
(2.05)**
0.002
-0.008
0.009
-0.036
-0.047
0.030
0.031
-0.005
(0.08)
(-0.08)
(0.29)
(-0.78)
(-1.08)
(1.01)
(0.65)
(-0.19)
Casual Wage Employment
Durable Goods
Motor
Bicycle
Electric Stove
Electric Kettle
Geyser
Primus Cooker
viii
Radio
-0.015
0.031
0.017
-0.006
0.026
0.006
0.008
0.012
(0.66)
(-0.57)
(1.33)
(0.51)
(-0.31)
(0.95)
(0.25)
(0.22)
0.059
0.204
-0.127
0.210
0.225
0.132
0.213
0.173
(0.67)
(4.21)***
(-0.90)
(4.67)***
(3.59)***
(2.52)**
(2.65)***
(3.39)***
0.119
-0.005
0.055
0.041
-0.000
0.089
0.086
0.042
(2.48)**
(-0.12)
(0.96)
(1.03)
(-0.00)
(2.09)**
(1.44)
(1.21)
Urban
-0.058
-0.165
-0.023
-0.222
-0.156
-0.117
(-0.72)
(-1.19)
(-0.23)
(-2.73)***
(-1.55)
(-1.55)
HHSize
-0.013
-0.046
-0.007
-0.032
-0.020
-0.016
0.012
-0.023
(-1.75)*
(-2.41)**
(-0.77)
(-3.22)***
(-1.37)
(-2.29)**
(0.78)
(-3.05)***
Telephone
TV
Rural/Urban
Log of Household Monthly Income
0.049
0.213
0.065
0.084
0.107
0.077
-0.005
0.105
(1.75)*
(3.87)***
(2.15)**
(2.65)***
(2.85)***
(3.04)***
(-0.14)
(4.06)***
Parental Wealth Comparisons
PWealth: Same as Parents
PWealth: Richer than Parents
Relative Income
0.536
0.374
0.495
0.455
0.441
0.460
0.504
0.465
(8.54)***
(6.14)***
(7.05)***
(8.63)***
(6.24)***
(9.78)***
(7.14)***
(8.89)***
0.460
0.413
0.415
0.483
0.412
0.490
0.480
0.465
(7.97)***
(7.37)***
(6.17)***
(9.16)***
(6.10)***
(9.58)***
(7.42)***
(9.40)***
0.01
-0.025
0.008
-0.009
-0.022
0.006
-0.020
-0.008
(0.27)
(-2.74)***
(0.72)
(-0.39)
(-2.15)**
(0.31)
(-0.56)
(-0.71)
0.042
-0.244
-0.002
-0.066
-0.035
-0.077
-0.099
-0.003
(0.43)
(-1.73)*
(-0.02)
(-0.63)
(-0.29)
(-0.79)
(-0.56)
(-0.03)
-0.016
-0.066
-0.013
-0.036
-0.035
-0.018
0.109
-0.006
(-1.95)**
(-4.03)***
(-1.35)
(-3.31)***
(-2.72)***
(-2.28)**
(0.89)
(-0.61)
0.015
0.064
0.012
0.035
0.039
0.013
-0.304
0.005
(1.75)*
(3.71)***
(1.18)
(2.92)***
(2.93)***
(1.51)
(-1.20)
(0.61)
5479
2020
3575
3924
2674
4825
2056
5443
Sick for the last 2 weeks?
(Yes = 1)
Age
Age^2/100
Number of Observations
Log Likelihood
Pseudo R^2
-7178.3271 -2500.9554 -4763.7128 -4931.3974 -3424.7554 -6277.0526 -2663.8340 -7104.4972
0.0563
0.1023
0.0627
0.1616
0.1467
0.1125
0.1142
0.1238
Note: Cluster and personal controls as in table 4. Controls for other household members include proportion of other male in
the household, proportion of people in each of different classified education level and employment status, proportion of
household members who have been sick for the last two weeks, average age and average age-squared/100. The results on
the controls of other household members on different groups of people are shown separately in table 7b.
ix
Table 7b: Happiness Equations and Household level averaged data
for Different Groups of People in South Africa
Gender
Proportion of other Male in the HH
Education Level
Prop. of STD 1-3
Prop. of STD 4-6
Prop. of STD 7-8
Prop. of STD 9-10
Prop. of STD 10 or Higher
Employment Status
Prop. of Housewife/Formal Education
Prop. of Regular Wage Employment
Prop. of Casual Wage Employment
Prop. of Self-Employment
Prop. of Retired
Sick for the last 2 weeks?
Prop. of Other HH members: (Yes = 1)
Averaged Age
Averaged Age^2/100
Number of Observations
Log Likelihood
Pseudo R^2
Black
Non-Black
Rural
Urban
Male
Female
Age<30
Age=>30
0.107
(1.06)
-0.003
(-0.04)
0.276
(2.13)**
-0.036
(-0.57)
0.140
(1.57)
0.024
(0.38)
0.126
(1.05)
0.023
(0.29)
0.055
(0.78)
-0.073
(-0.86)
0.080
(0.80)
0.011
(0.11)
0.148
(0.82)
0.272
(1.68)*
0.151
(1.13)
0.228
(1.78)*
0.434
(3.14)***
0.335
(2.17)**
0.059
(0.68)
-0.028
(-0.25)
0.058
(0.45)
0.026
(0.21)
0.169
(0.67)
0.142
(1.54)
-0.010
(-0.11)
0.089
(0.92)
0.214
(2.06)**
0.217
(1.91)*
0.211
(2.16)**
0.020
(0.19)
0.156
(1.48)
0.211
(1.83)*
0.291
(1.86)*
0.020
(0.24)
-0.012
(-0.13)
0.013
(0.12)
0.204
(1.95)**
0.187
(1.49)
0.067
(0.50)
0.104
(0.63)
0.287
(1.80)*
0.222
(1.68)*
0.291
(1.56)
0.121
(1.76)*
-0.039
(-0.54)
0.018
(0.20)
0.148
(1.63)*
0.189
(1.69)*
0.139
(2.73)***
0.200
(2.35)**
0.043
(0.46)
0.332
(3.26)***
0.160
(2.00)**
0.204
(1.36)
-0.041
(-0.33)
0.034
(0.17)
0.142
(0.65)
0.099
(0.53)
0.147
(2.31)**
0.278
(2.37)**
-0.053
(-0.39)
0.414
(2.98)***
0.119
(1.33)
0.242
(2.74)***
0.060
(0.82)
0.079
(0.70)
0.247
(2.04)**
0.227
(1.85)*
0.224
(2.32)**
0.156
(1.52)
-0.051
(-0.36)
0.264
(1.58)
0.198
(1.30)
0.122
(2.14)**
0.094
(1.37)
0.012
(0.11)
0.300
(2.55)**
0.150
(1.76)*
0.263
(2.43)**
0.352
(2.83)***
0.086
(0.50)
0.253
(1.55)
0.414
(2.59)***
0.131
(2.25)**
0.065
(0.92)
-0.025
(-0.24)
0.335
(3.29)***
0.101
(1.29)
0.042
(0.43)
0.003
(0.54)
-0.001
(-0.19)
0.057
(0.36)
-0.002
(-0.21)
0.005
(0.40)
0.041
(0.29)
0.000
(0.05)
0.006
(0.65)
0.005
(0.04)
-0.000
(-0.00)
0.004
(0.51)
0.124
(0.86)
-0.001
(-0.14)
0.003
(0.26)
-0.027
(-0.26)
-0.004
(-0.66)
0.009
(1.32)
0.175
(0.91)
0.007
(0.72)
-0.008
(-0.58)
-0.028
(-0.28)
-0.004
(-0.71)
0.010
(1.59)
5479
2020
3575
3924
2674
4825
2056
5443
-7178.3271 -2500.9554 -4763.7128 -4931.3974 -3424.7554 -6277.0526 -2663.8340 -7104.4972
0.0563
0.1023
0.0627
0.1616
0.1467
0.1125
0.1142
0.1238
Note: Household level averaged data are taken from all household members, excluding the PQOL respondent from each
household, if HHSize > 1. For households with HHSize = 1, the household-level average data are taken from PQOL
respondents themselves.
x
Table 8: Relative Income and Durable Assets Consumption
Average Number of Durable Assets Owned by Each Household
Relative Income
Motor Vehicle
Geyser
Telephone
Television
Log of HH income
Q1
0.151
0.144
0.119
0.301
5.540
Q2
0.305
0.262
0.251
0.497
6.738
Q3
0.493
0.374
0.382
0.664
7.320
Q4
0.671
0.388
0.453
0.803
7.893
Average Number of Durable Assets in the Community
Relative Income
Motor Vehicle
Geyser
Telephone
Television
N
Q1
0.376
0.244
0.258
0.517
1875
Q2
0.397
0.290
0.298
0.572
1875
Q3
0.463
0.343
0.344
0.614
1874
Q4
0.401
0.291
0.301
0.576
1875
Average Number of Durable Assets Owned by Each Household
Relative Income
Motor Vehicle
Geyser
Telephone
Television
Log of HH income
Rel.Y < 0.25
0.123
0.124
0.080
0.251
5.018
0.25 <= Rel.Y < 1
0.304
0.255
0.250
0.484
6.693
1 <= Rel.Y < 1.5
0.599
0.423
0.444
0.762
7.531
1.5 <= Rel.Y < 2
0.599
0.369
0.443
0.789
7.829
Rel.Y > 2
0.910
0.376
0.441
0.855
8.461
Average Number of Durable Assets in the Community
Relative Income
Motor Vehicle
Geyser
Telephone
Television
N
Rel.Y < 0.25
0.412
0.263
0.270
0.515
977
0.25 <= Rel.Y < 1
0.387
0.280
0.289
0.560
3687
1 <= Rel.Y < 1.5
0.508
0.370
0.379
0.662
1463
1.5 <= Rel.Y < 2
0.386
0.283
0.290
0.565
1061
Rel.Y > 2
0.277
0.189
0.197
0.433
311
Note: Relative income = household monthly income/average community household monthly income. The sample means for
absolute consumption (average consumption in the community) for each selected durable assets are: motor vehicle 0.405
(0.409), geyser 0.292 (0.292), telephone 0.301 (0.300), television 0.566 (0.569).
xi
Table 9: Happiness Equation with Average Durable Assets Consumption in the Community
Full Sample
Black
Non-black
Rural
Urban
Male
Female
Age<30
Age=>30
0.473
0.683
0.377
0.399
0.388
0.371
0.444
0.454
0.515
(3.74)***
(3.12)***
(3.01)***
(1.27)
(3.00)***
(2.36)**
(2.96)***
(2.57)***
(4.00)***
0.068
-0.211
0.043
0.333
-0.021
0.437
-0.111
0.504
-0.066
(0.40)
(-0.80)
(0.29)
(0.66)
(-0.12)
(2.21)**
(-0.57)
(2.15)**
(-0.38)
Avg. no. of Telephone
0.545
1.140
0.052
0.115
0.670
0.300
0.652
0.703
0.494
(2.41)**
(3.07)***
(0.29)
(0.15)
(3.36)***
(1.17)
(2.86)***
(2.19)**
(2.21)**
Avg. no. of TV
-0.356
-0.360
-0.345
-0.509
-0.257
-0.609
-0.108
-0.718
-0.226
(-2.07)**
(-1.57)
(-2.15)**
(-1.54)
(-1.35)
(-3.08)***
(-0.60)
(-2.90)***
(-1.39)
0.055
0.050
0.183
0.068
0.026
0.096
0.049
-0.026
0.084
Average no. of Motor Vehicle
Avg. no. of Geyser
Log of household monthly income
Relative income
N
Log-Likelihood
Pseudo^2
(2.43)**
(1.93)*
(3.27)***
(2.24)**
(0.80)
(2.54)**
(2.12)**
(-0.67)
(3.33)***
0.016
0.027
-0.014
0.010
0.056
-0.003
0.035
0.032
0.013
(1.66)*
(1.96)**
(-1.63)
(0.93)
(2.47)**
(-0.46)
(2.83)***
(0.86)
(1.47)
7499
5479
2020
3575
3924
2674
4825
2056
5443
-9736.9807
-7053.2965
-2493.4012
-4755.2512
-4862.8809
-3399.9047
-6202.0770
-2628.4653
-7031.5209
0.1246
0.0727
0.1051
0.0644
0.1732
0.1529
0.1231
0.1260
0.1328
Note: Personal, household, and cluster controls as in table 4.
xii
Table 10: The Relationships between Happiness Responses and Socio-economic Variables
in Rich Countries and South Africa
Rich Countries
South Africa
Income
+
+
Education
+
-
Unemployment
-
-
Household Size
-
-
Black
-
-
Married
+
?
Male
-
?
External Relative Income
+
+
Internal Relative Income
+
U-Shaped
+
U-Shaped
Age
Source: Oswald (1997), McBride (2000), Blanchflower and Oswald (2003).
Note: (+) positive, (-) negative, (?) inconclusive.
External relative income = household income/avg. regional income level. Internal relative income: current income level/past
income level (Richer Countries), feeling richer than parents at the same age (South Africa).
xiv
Appendix: (a) Correlation Matrix for Different Durable Goods
and Log Household Income
Motor
Bicycle
EStove
EKettle
Fridge
Gas
Motor
1.000
-
-
-
-
-
Bicycle
0.403
1.000
-
-
-
-
Electric Stove
0.492
0.253
1.000
-
-
-
Electric Kettle
0.547
0.285
0.746
1.000
-
-
Fridge
0.620
0.332
0.665
0.687
1.000
-
Gas
0.167
0.113
0.125
0.149
0.196
1.000
Geyser
0.637
0.355
0.640
0.685
0.649
0.140
Primus Cooker
-0.294
-0.148
-0.455
-0.443
-0.368
-0.117
Radio
0.545
0.383
0.384
0.438
0.480
0.133
Telephone
0.628
0.335
0.621
0.664
0.649
0.136
TV
0.576
0.337
0.613
0.644
0.677
0.212
Log HH income
0.549
0.311
0.570
0.596
0.588
0.168
Geyser
PCooker
Radio
Telep
TV
Log income
Motor
-
-
-
-
-
-
Bicycle
-
-
-
-
-
-
Electric Stove
-
-
-
-
-
-
Electric Kettle
-
-
-
-
-
-
Fridge
-
-
-
-
-
-
Gas
-
-
-
-
-
-
Geyser
1.000
-
-
-
-
-
Primus Cooker
-0.417
1.000
-
-
-
-
Radio
0.485
-0.137
1.000
-
-
-
Telephone
0.691
-0.366
0.490
1.000
-
-
TV
0.606
-0.322
0.514
0.618
1.000
Log HH income
0.583
-0.310
0.462
0.582
0.580
xiv
1.000
Appendix: (b) Summary of conclusions on US and UK well-being data
1) Black people in the US are much less happy, ceteris paribus, than whites. One interpretation comes
from the possible existence of racial discrimination in America.
2) Higher income is associated with higher happiness.
3) Reported well-being is greatest among women, healthy and married people, the highly educated, and
those whose parents did not divorce.
4) Unemployed people are very unhappy.
5) To ‘compensate’ men for unemployment would take a rise in income at the mean of approximately
$60,000 per annum, and to ‘compensate’ for being black would take extra $30,000 per annum.
6) Relative income matters per se.
7) Happiness and life-satisfaction are U-shaped in age. In both Britain and the US, well-being reaches a
minimum, other things held constant, around the age of forty.
Source: Oswald (1997), Blanchflower and Oswald (2003).
xiv