Income and Subjective Well-Being: Evidence from Singapore's First National Non-Contributory Pension

48 Pages Posted: 30 Jun 2017 Last revised: 15 May 2018

See all articles by Yanying Chen

Yanying Chen

School of Economics, Singapore Management University

Yi Jin Tan

School of Economics, Singapore Management University

Date Written: May 10, 2018

Abstract

We use a new monthly panel and a difference-in-differences strategy to study the effects of an exogenous permanent income shock on subjective well-being along previously unexplored dimensions. This permanent income shock is the introduction of Singapore’s first national non-contributory pension, the Silver Support Scheme. The pension improved the life satisfaction of recipients, and appeared to be driven by social, household income, and economic satisfaction. Consistent with the predictions of standard consumption-savings models, well-being improved when the shock was unanticipated (at announcement), but did not improve significantly further when the shock was anticipated (at disbursement). In addition, we find evidence that the marginal utility of income varies – recipients who reported being less financially prepared for retirement exhibited larger increases in well-being. Surprisingly, we find little evidence of such heterogeneity by individuals’ net assets. Lastly, well-being did not improve if an individual’s spouse received SSS payouts but he/she did not. Our results suggest that future policies could consider heterogeneity among individuals for greater welfare gains.

Keywords: subjective well-being, life satisfaction, health, income, non-contributory pension

JEL Classification: H3, I1, I3

Suggested Citation

Chen, Yanying and Tan, Yi Jin, Income and Subjective Well-Being: Evidence from Singapore's First National Non-Contributory Pension (May 10, 2018). Available at SSRN: https://ssrn.com/abstract=2994593 or http://dx.doi.org/10.2139/ssrn.2994593

Yanying Chen

School of Economics, Singapore Management University ( email )

90 Stamford Road
Singapore, 178903
Singapore

Yi Jin Tan (Contact Author)

School of Economics, Singapore Management University ( email )

90 Stamford Road
Singapore, Singapore 178903
Singapore

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