Previous studies on the determinants of subjective well-being concur on the
importance of relative income, i.e., the fact that individuals’ subjective well-being
is dependent on how well they are doing in relation to their reference group.
Using south African data from 1993, Kingdon and Knight (2006, 2007) found
that in apartheid south Africa, reference groups were mostly divided along
racial lines, i.e., individuals’ relative income within their specific race group
was significantly correlated with their subjective well-being. In this article, the
methodology of Kingdon and Knight is repeated using data from the first wave
of the national Income Dynamics study (2008), in order to explore whether
these reference groups have shifted in post-apartheid South Africa. The findings
suggest that race-specific relative income is no longer significantly correlated
with subjective well-being for the south African population as a whole, but rather
that perceived relative income within the country matters as a significant predictor
of subjective well-being. these results seem to be in line with the hypothesis of
reference groups shifting away from a racial delineation to a more inclusive one,
subsequent to the racial integration which took place after 1994. However, for
a sub-population within south Africa, namely those below the poverty line (who
are mostly black), a race-specific reference group remains relevant. The article
provides potential reasons for why this is the case.

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Keywords

Happiness, poverty, reference groups, south Africa, subjective well-being