Revisiting the Determinants of Subjective Well-Being in a Developing Context: Longitudinal Evidence from South Africa

Abstract

Maximizing citizens’ happiness and life satisfaction—commonly referred to as subjective well-being (SWB) is a key objective of policy frameworks developed by international organizations. To design effective interventions that enhance SWB, it is essential to identify its main determinants. However, much of the existing empirical evidence is based on non-representative samples and is largely drawn from developed countries, limiting their applicability to developing contexts. Using data from all five waves of the National Income Dynamics Study (NIDS) panel, this study investigates the determinants of subjective well-being among urban and rural populations in South Africa. The analysis employs a random effect ordered probit (REOP) model to control for unobserved individual heterogeneity, while robustness is assessed using a pooled ordinary least squares (OLS) approach. The results show that income, marital status, religious participation, gender, access to electricity and clean water, and age (squared) are significant determinants of SWB in the full sample. Employment is positive but insignificant overall, though it is positive and significant in rural areas and negative and insignificant in urban areas. Overall, the findings highlight the importance of income and basic services in enhancing well-being, as well as important urban–rural differences in the determinants of happiness.