From cradle to grave? poverty, social assistance, and subjective well-being in kyrgyzstan

Waidler, Jennifer (2018). 'From Cradle to Grave? Poverty, Social Assistance, and Subjective Well-being in Kyrgyzstan' Paper presented at the annual conference of the HDCA, Buenos Aires, Argentina 2018.

Abstract

Despite a high number of studies looking at objective measures of well-being, subjective well-being has received less attention in the impact evaluation literature when estimating the effects of social assistance. Due to the fact that objective measures of well-being fail to capture fundamental aspects of life such as overall life satisfaction, there is growing consensus on the importance of measuring well-being through subjective indicators (Stiglitz, Sen and Fitoussi 2009). There is also a growing literature stating that several dimensions of subjective wellbeing (lack of stress, happiness, satisfaction with life) have an instrumental value, as they are positively related with outcomes such as productivity, decision-making, and educational and health outcomes (Attah et al. 2016).

 

Subjective well-being includes concepts such as life satisfaction, happiness, and positive affect. In the literature, it is usually defined as “people’s multidimensional evaluation of their lives, including cognitive judgements of life satisfaction as well as affective evaluations of moods and emotions” (Eid and Diener 2004, 63). Despite the importance of measuring the subjective well-being of individuals, the relationship between government (social assistance) transfers and subjective well-being has received little attention in the literature. After all, social transfers aim to increase objective well-being in the first place by increasing the financial resources of households and individuals and reduce monetary poverty. There is a large number of studies that have found positive effects of social transfers on different aspects of objective well-being (see Bastagli et al. 2016 for a summary of impact evaluations), yet the relationship between social transfers and subjective well-being remains understudied.

 

The mechanisms by which social assistance transfers affect subjective well-being are likely to differ from the ones affecting objective indicators of well-being. One can expect increased levels of subjective well-being if social assistance transfers reduce poverty as well as addresses the negative mechanisms associated with poverty, such as stress, mental health problems or shame (Haushofer and Fehr 2014; Roelen 2017). However, if receiving social assistance leads to stigma or shame, subjective well-being could be reduced despite the increase in financial resources, and, hence, objective well-being. Concepts such as poverty and stigma may have different connotations in different contexts and may depend, for instance, on the type of political regime (e.g. communism or capitalist) (Barr 1994), or the extent of inequality in a country (Li et al. 2016).

 

This paper takes a multidimensional approach to measuring subjective well-being as it recognizes that individuals -to be well-off- need to achieve a number of capabilities that they consider important to function in society (such as appropriate health, education, freedom of speech, etc.) In addition to the capabilities approach, other conceptual frameworks are based on multidimensional understandings of poverty (Roelen 2017). Some frameworks, in addition to objective measures of well-being such as consumption, educational attainment, or nutrition, include relational and subjective components of well-being in their definition, such as the Wellbeing in Developing Countries (WeD) research group at the University of Bath (White 2010).

 

Drawing on three rounds of the Life in Kyrgyzstan survey (LiK), this paper studies the effects of social assistance on subjective well-being in Kyrgyzstan. This topic has not been researched in a former Soviet country before and, consequently, findings could be informative for other countries which share a similar history. Under the Soviet Union, the state bore the responsibility of providing social benefits in the same way as it controlled the whole economy (Atkinson and Micklewright 1992). At the same time, most of the benefits such as pensions or family benefits were considered income support, meaning that they aimed to complement labor income. Social assistance, understood as transfers targeted to people living in poverty, was highly residual and stigmatized. In the Soviet period, poverty was seen as a pathology and, to a big extent, a responsibility directly attributed to the individual suffering from poverty (Barr 1994).

 

Several measures of subjective well-being are analysed, such as overall life satisfaction, satisfaction with specific dimensions of well-being such as health, household living standards and security, individual's perception of the economic situation of the household compared to one year before, and the individual's subjective expectation of the economic situation of the household in the future. This paper contributes to the literature in the following ways: in addition to adding new evidence on the relationship between social assistance and subjective well-being, this paper gets rid of potential endogeneity by including control variables that are usually unobserved, such as an index for personality traits, and relying on matching and panel data techniques (difference in difference) to correct for unobserved heterogeneity.

 

Contrary to previous studies that have found a positive relation between social assistance and subjective well-being (Haushofer and Shapiro 2013; Handa et al. 2014), I find, in most of the estimation performed, a negative effect of social assistance on life satisfaction, as well on the subjective economic expectations with respect to the future. Moreover, to a certain extent, social assistance recipients are less likely to report an improvement in the economic situation with respect to the past.

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