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Abstract
BackgroundMental health and poverty are strongly interlinked. There is a gap in the literature on the effects of poverty alleviation programmes on mental health. We aim to fill this gap by studying the effect of an exogenous income shock generated by the Child Support Grant, South Africa’s largest Unconditional Cash Transfer (UCT) programme, on mental health.MethodsWe use biennial data on 10,925 individuals from the National Income Dynamics Study between 2008 and 2014. We exploit the programme’s eligibility criteria to estimate instrumental variable Fixed Effects models.ResultsWe find that receiving the Child Support Grant improves adult mental health by 0.822 points (on a 0–30 scale), 4.1% of the sample mean.ConclusionOur findings show that UCT programmes have strong mental health benefits for the poor adult population.
Highlights
Mental health and poverty are strongly interlinked
We focus on South Africa in the analysis for the high prevalence of mental health disorders in the country, with one in six of the population suffering from depression or anxiety [35].Unipolar depression has the highest prevalence of all mental illnesses among the South African population contributing to 5.8% of the overall burden of disease, which is 1.5 times higher compared to other Low- and MiddleIncome Countries (LMICs) [21]
We find further strong support for the causality of cash transfer effects on mental health and the exclusion assumption of the instrumental variable to hold as living with a child in the Child Support Grant (CSG) age-eligibility brackets in non-poor households has no statistically significant effect on mental health
Summary
There is a gap in the literature on the effects of poverty alleviation programmes on mental health. We aim to fill this gap by studying the effect of an exogenous income shock generated by the Child Support Grant, South Africa’s largest Unconditional Cash Transfer (UCT) programme, on mental health. As unconditional cash transfer (UCT) programmes are used to alleviate poverty, it is natural to investigate their effect on mental health. One can use the Grossman model of health capital [17] to hypothesise different possible effects of UCTs on mental health. Health has a dual nature in the model. It is a consumption good as it directly generates utility, and an investment good (human capital), required for income
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