Paying for Happiness: Experimental Results from a Large Cash Transfer Program in Malawi

Kelly Kilburn, Sudhanshu Handa, Gustavo Angeles, Maxton Tsoka, Peter Mvula, Kelly Kilburn, Sudhanshu Handa, Gustavo Angeles, Maxton Tsoka, Peter Mvula

Abstract

This study analyzes the short-term impact of an exogenous, positive income shock on caregivers' subjective well-being (SWB) in Malawi using panel data from 3,365 households targeted to receive Malawi's Social Cash Transfer Program that provides unconditional cash to ultra-poor, labor-constrained households. The study consists of a cluster-randomized, longitudinal design. After the baseline survey, half of these village clusters were randomly selected to receive the transfer and a follow-up was conducted 17 months later. We find that the short-term impact of household income increases from the cash transfer leads to substantial SWB gains among caregivers. After a year's worth of transfers, caregivers in beneficiary households have higher life satisfaction and are more likely to believe in a better future. We examine whether program impacts on consumption, food security, resilience, and hopefulness could explain the increase in SWB but do not find that any of these mechanisms individually mediate our results.

© 2018 The Authors. Journal of Policy Analysis and Management published by Wiley Periodicals, Inc. on behalf of Association for Public Policy and Management.

Figures

Figure 1
Figure 1
QoL Scale Over Household Consumption by Study Arm and Wave. Note: Lowess graph showing the change in QoL scores over time for each study arm.
Figure A1
Figure A1
Household‐Level Study Flow Chart for the Malawi SCTP.

References

    1. Attah, R. , Barca, V. , Kardan, A. , MacAuslan, I. , Merttens, F. , & Pellerano, L. (2016). Can social protection affect psychosocial well‐being and why does this matter? Lessons from cash transfers in Sub‐Saharan Africa. Journal of Development Studies, 52, 1115–1131.
    1. Baird, S. , De Hoop, J. , & Özler, B. (2013). Income shocks and adolescent mental health. Journal of Human Resources, 48, 370–403.
    1. Banerjee, A. , & Duflo, E. (2012). Poor economics: A radical rethinking of the way to fight global poverty. New York, NY: PublicAffairs.
    1. Banerjee, A. , Duflo, E. , Goldberg, N. , Karlan, D. , Osei, R. , Parienté, W. , … Udry, C. (2015). A multifaceted program causes lasting progress for the very poor: Evidence from six countries. Science, 348, 1260799.
    1. Banerjee, A. , & Mullainathan, S. (2010). The shape of temptation: Implications for the economic lives of the poor. Cambridge, MA: National Bureau of Economic Research.
    1. Bastagli, F. , Hagen‐Zanker, J. , Harman, L. , Barca, V. , Sturge, G. , Schmidt, T. , & Pellerano, L. (2016). Cash transfers: What does the evidence say? A rigorous review of programme impact and the role of design and implementation features. London, England: Overseas Development Institute.
    1. Beegle, K. , Himelein, K. , & Ravallion, M. (2012). Frame‐of‐reference bias in subjective welfare. Journal of Economic Behavior & Organization, 81, 556–570.
    1. Blattman, C. , Green, E. P. , Jamison, J. , Lehmann, M. C. , & Annan, J. (2016). The returns to microenterprise support among the ultrapoor: A field experiment in postwar Uganda. American Economic Journal: Applied Economics, 8, 35–64.
    1. Cameron, A. C. , Gelbach, J. B. , & Miller, D. L. (2008). Bootstrap‐based improvements for inference with clustered errors. Review of Economics and Statistics, 90, 414–427.
    1. Clark, A. E. , Frijters, P. , & Shields, M. A. (2008). Relative income, happiness, and utility: An explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 46, 95–144.
    1. Deaton, A. (2008). Income, health, and well‐being around the world: Evidence from the Gallup World Poll. Journal of Economic Perspectives, 22, 53–72.
    1. Decancq, K. , & Neumann, D. (2014). Does the choice of well‐being measure matter empirically? An illustration with German data. IZA Discussion Paper No. 8589. Retrieved March 8, 2017, from .
    1. Diener, E. D. , Emmons, R. A. , Larsen, R. J. , & Griffin, S. (1985). The satisfaction with life scale. Journal of Personality Assessment, 49, 71–75.
    1. Diener, E. , Larsen, R. J. , & Emmons, R. A. (1984). Person × situation interactions: Choice of situations and congruence response models. Journal of Personality and Social Psychology, 47, 580–592.
    1. Diener, E. , Lucas, R. E. , & Oishi, S. (2009). Subjective well‐being: The science of happiness and life satisfaction. Oxford Handbook of Positive Psychology, 2, 187–194.
    1. Dolan, P. , Layard, R. , & Metcalfe, R . (2011). Measuring subjective well‐being for public policy: Recommendations on measures. London, England: Centre for Economic Performance, London School of Economics and Political Science; Retrieved January 25, 2017, from .
    1. Dolan, P. , Peasgood, T. , & White, M. (2008). Do we really know what makes us happy? A review of the economic literature on the factors associated with subjective well‐being. Journal of Economic Psychology, 29, 94–122.
    1. Douthitt, R. A. , MacDonald, M. , & Mullis, R. (1992). The relationship between measures of subjective and economic well‐being: A new look. Social Indicators Research, 26, 407–422.
    1. Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. Nations and Households in Economic Growth, 89, 89–125.
    1. Easterlin, R. A. , McVey, L. A. , Switek, M. , Sawangfa, O. , & Zweig, J. S. (2010). The happiness–income paradox revisited. Proceedings of the National Academy of Sciences, 107, 22463–22468.
    1. Ellis, F. (2012). “We Are All Poor Here”: Economic difference, social divisiveness and targeting cash transfers in Sub‐Saharan Africa. Journal of Development Studies, 48, 201–214.
    1. EU Commission . (2009). GDP and beyond: Measuring progress in a changing world. Brussels, Belgium: Author.
    1. Fafchamps, M. , & Shilpi, F. (2009). Isolation and subjective welfare: Evidence from South Asia. Economic Development and Cultural Change, 57, 641–683.
    1. Folkman, S. (1997). Positive psychological states and coping with severe stress. Social Science & Medicine, 45, 1207–1221.
    1. Frey, B. S. , & Stutzer, A. (2002). What can economists learn from happiness research? Journal of Economic Literature, 40, 402–435.
    1. Frijters, P. , Haisken‐DeNew, J. P. , & Shields, M. A. (2004). Money does matter! Evidence from increasing real income and life satisfaction in East Germany following reunification. American Economic Review, 94, 730–740.
    1. Gardner, J. , & Oswald, A. J. (2007). Money and mental well‐being: A longitudinal study of medium‐sized lottery wins. Journal of Health Economics, 26, 49–60.
    1. Gennetian, L. A. , & Shafir, E. (2015). The persistence of poverty in the context of financial instability: A behavioral perspective. Journal of Policy Analysis and Management, 34, 904–936.
    1. Graham, C. , & Behrman, J. R. (2010). How Latin Americans assess their quality of life: Insights and puzzles from novel metrics of wellbeing In Paradox and perception: Measuring quality of life in Latin America (pp. 1–21). Washington, DC: Brookings Institution Press.
    1. Green, E. P. , Blattman, C. , Jamison, J. , & Annan, J. (2016). Does poverty alleviation decrease depression symptoms in post‐conflict settings? A cluster‐randomized trial of microenterprise assistance in Northern Uganda. Global Mental Health, 3, e7.
    1. Handa, S. , Kilburn, K. , Barrington, C. , Angeles, G. , Mvula, P. , & Tsoka, M. (2013). The Malawi SCT impact evaluation inception report. Chapel Hill, NC: Carolina Population Center at the University of North Carolina.
    1. Handa, S. , Seidenfeld, D. , Davis, B. , Tembo, G. , & the Zambia Cash Transfer Evaluation Team . (2016). The social and productive impacts of Zambia's Child Grant. Journal of Policy Analysis and Management, 35, 357–387.
    1. Haushofer, J. , Reisinger, J. , & Shapiro, J. (2015). Your gain is my pain: Negative psychological externalities of cash transfers. Working paper. Retrived February 2016 from
    1. Haushofer, J. , & Shapiro, J. (2016). The short‐term impact of unconditional cash transfers to the poor: Experimental evidence from Kenya. Quarterly Journal of Economics, 4, 1973–2042.
    1. Hjelm, L. (2016). The impact of cash transfers on food security. Transfer Project Research Brief 2016–01. Chapel Hill, NC: Carolina Population Center, UNC‐Chapel Hill.
    1. Honorati, M. , Gentilini, U. , & Yemtsov, R. G. (2015). The state of social safety nets 2015. Washington, DC: World Bank Group.
    1. Kahneman, D. (2003). Maps of bounded rationality: Psychology for behavioral economics. American Economic Review, 93, 1449–1475.
    1. Kahneman, D. , & Deaton, A. (2010). High income improves evaluation of life but not emotional well‐being. Proceedings of the National Academy of Sciences, 107, 16489–16493.
    1. Kahneman, D. , & Krueger, A. B. (2006). Developments in the measurement of subjective well‐being. Journal of Economic Perspectives, 20, 3–24.
    1. Keele, L. , Tingley, D. , & Yamamoto, T. (2015). Identifying mechanisms behind policy interventions via causal mediation analysis. Journal of Policy Analysis and Management, 34, 937–963.
    1. Kobau, R. , Sniezek, J. , Zack, M. , Lucas, R. , & Burns, A. (2010). Wellbeing assessment: An evaluation of well‐being scales for public health and population estimates of well‐being among US adults. Applied Psychology: Health and Wellbeing, 2, 272–297.
    1. Laderchi, C. R. , Saith, R. , & Stewart, F. (2003). Does it matter that we do not agree on the definition of poverty? A comparison of four approaches. Oxford Development Studies, 31, 243–274.
    1. Lloyd‐Sherlock, P. , Barrientos, A. , Moller, V. , & Saboia, J. (2012). Pensions, poverty and wellbeing in later life: Comparative research from South Africa and Brazil. Journal of Aging Studies, 26, 243–252.
    1. Lucas, R. E. , Diener, E. , & Suh, E. (1996). Discriminant validity of well‐being measures. Journal of Personality and Social Psychology, 71, 616–628.
    1. Malawi SCTP Evaluation Team . (2015). Malawi social cash transfer programme midline evaluation report. Chapel Hill, NC: Carolina Population Center at the University of North Carolina.
    1. Miller, C. , Tsoka, M. , & Reichart, K. (2008). Impact evaluation report external evaluation of the Mchinji Social Cash Transfer pilot. Boston, MA: Center for International Health and Development, Boston University School of Public Health.
    1. Ravallion, M. , & Lokshin, M. (2010). Who cares about relative deprivation? Journal of Economic Behavior & Organization, 73, 171–185.
    1. Rayo, L. , & Becker, G. S. (2007). Evolutionary efficiency and happiness. Journal of Political Economy, 115, 302–337.
    1. Rojas, M. (2007). Heterogeneity in the relationship between income and happiness: A conceptual‐referent‐theory explanation. Journal of Economic Psychology, 28, 1–14.
    1. Rojas, M. (2008). Experienced poverty and income poverty in Mexico: A subjective well‐being approach. World Development, 36, 1078–1093.
    1. Rojas, M. (2015). Poverty and people's wellbeing In Glatzer W., Camfield L., Møller V., & Rojas M. (Eds.), Global handbook of quality of life (pp. 317–350). Dordrecht, the Netherlands: Springer.
    1. Samuels, F. , & Stavropoulou, M. (2016). “Being able to breathe again”: The effects of cash transfer programmes on psychosocial wellbeing. Journal of Development Studies, 52, 1099–1114.
    1. Scheier, M. F. , & Carver, C. S. (1985). Optimism, coping, and health: Assessment and implications of generalized outcome expectancies. Health Psychology, 4, 219–247.
    1. Stevenson, B. , & Wolfers, J. (2008). Economic growth and subjective well‐being: Reassessing the Easterlin paradox. Cambridge, MA: National Bureau of Economic Research.
    1. Stiglitz, J. , Sen, A. , & Fitoussi, J. P. (2009). The measurement of economic performance and social progress revisited. Reflections and overview. Commission on the measurement of economic performance and social progress, Paris, France.
    1. The Kenya CT‐OVC Evaluation Team . (2012a). The impact of Kenya's cash transfer for orphans and vulnerable children on human capital. Journal of Development Effectiveness, 4, 38–49.
    1. The Kenya CT‐OVC Evaluation Team . (2012b). The impact of the Kenya cash transfer program for orphans and vulnerable children on household spending. Journal of Development Effectiveness, 4, 9–37.
    1. Watson, D. , Clark, L. A. , & Carey, G. (1988). Positive and negative affectivity and their relation to anxiety and depressive disorders. Journal of Abnormal Psychology, 97, 346–353.
    1. Weimann, J. , Knabe, A. , & Schöb, R. (2015). Measuring happiness: The economics of well‐being. Cambridge, MA: The MIT Press.
    1. World Health Organization (WHO) . (1998). The World Health Organization quality of life assessment (WHOQOL): Development and general psychometric properties. Social Science & Medicine, 46, 1569–1585.

Source: PubMed

Sponsors and Collaborators

Medical Conditions

Drug Interventions

3
Subscribe