The effect of cash transfers on mental health – new evidence from South Africa

Julius Ohrnberger · Eleonora Fichera · Matt Sutton · Laura Anselmi

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Poverty, Education, and Child Welfare Mental Health Treatment and Access Employment and Welfare Studies

Abstract

BACKGROUND: Mental 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. METHODS: We 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. RESULTS: We 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. CONCLUSION: Our findings show that UCT programmes have strong mental health benefits for the poor adult population.

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References

1977The CES-D Scale 2007No health without mental health 2013Poverty Impedes Cognitive Function 2014Social determinants of mental health 2010Poverty and common mental disorders in low and middle income countries: A systematic review 2016The Short-term Impact of Unconditional Cash Transfers to the Poor: Experimental Evidence from Kenya*2011Poverty and mental disorders: breaking the cycle in low-income and middle-income countries 1992Testing for Selectivity Bias in Panel Data Models

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2023Gone Too Soon: priorities for action to prevent premature mortality associated with mental illness and mental distress 2020The effect of cash transfers on mental health: Opening the black box – A study from South Africa 2021Cash transfers and the mental health of young people: Evidence from South Africa's child support grant 2023Effects of a Combination Economic Empowerment and Family Strengthening Intervention on Psychosocial Well-being Among Ugandan Adolescent Girls and Young Women: Analysis of a Cluster Randomized Controlled Trial (Suubi4Her)2024

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