Happiness, Happiness Inequality and Income Dynamics in South Africa

Abstract

This paper explores the trends and determinants in happiness and happiness inequality in South Africa at the individual and aggregate district municipality level using the four waves of National Income Dynamics data. The findings indicate that while both happiness as well as income levels show increasing trends in recent years, the inequality trends differ substantially between income and happiness measures. Despite increase in income inequality, South Africa has been registering decreased happiness inequality. The paper identifies the significant determinants of happiness and happiness inequality and finds that income determines happiness level as well as happiness inequality at both individual and aggregate level. The similarity of findings at the individual and aggregate levels indicate that the happiness–income paradox noted in literature does not seem to exist within the South African context. At the aggregate level, income inequality has significant negative and positive impact on happiness levels and happiness inequality respectively. Our finding of increasing happiness levels and decreasing happiness inequality in the backdrop of increasing income inequality, is indicative that absolute effect rather than relative effect of income dominates happiness and happiness inequality at the country level in South Africa. The paper’s findings reinforce the argument that happiness inequality may be a useful supplementary measure of inequality in society.