Investigating the relationship between income and subjective well-being in South Africa.

Abstract

Conventional approaches to the analysis of human well-being use money-metric measures such as income or consumption. However, they are heavily criticised for relying on a limited understanding of well-being. In recent decades, subjective measures of well-being have been increasingly presented as providing a more inclusive and holistic perspective of well-being. Using data from the National Income Dynamics Study (NIDS), this dissertation examines the relationship between income, a common money-metric measure of well-being, and life satisfaction, a key indicator of subjective well-being. The results show that income and life satisfaction exhibit a weak but significant positive relationship, one which is stronger at lower levels of income. In addition to income, the analysis identifies a number of other significant correlates of subjective well-being. Furthermore, several differences in the correlates of income and life satisfaction are detected. These results highlight how subjective well-being measures can include information about people’s lived experiences in ways that are not fully captured in objective money-metric measures.