Social Grants, Welfare, and the Incentive to Trade-Off Health for Income among Individuals on HAART in South Africa

Abstract:     
South Africa’s government disability grants are considered important in providing income support to low-income AIDS patients. Indeed, anecdotal evidence suggests that some individuals may opt to compromise their health by foregoing highly active antiretroviral treatment (HAART) to remain eligible for the grant. In this study, we examined the disability grant’s importance to individual and household welfare, and the impact of its loss using a unique longitudinal dataset of HAART patients in Khayelitsha, Cape Town. We found that grant loss was associated with sizeable income drops and changes in household composition. However, we found no evidence of individuals choosing illness over grant loss. Our analysis also suggested that though the grants officially target those too sick to work, some people were able to keep grants longer than expected, and others received grants while employed. This has helped cushion people on HAART, but other welfare measures need consideration.

Keywords: AIDS, Highly Active Antiretroviral Therapy (HAART), Incentives, Social Security

JEL Classifications: I11, I18

Accepted Paper Series