Income and Subjective Well-Being: Evidence from Singapore’s First National Non-Contributory Pension
By Yanying Chen & Yi Jin Tan (Singapore Management University)
Using a new monthly longitudinal survey of elderly Singaporeans, we precisely time and study the announcement and disbursement effects of an exogeneous permanent income shock on a broad range of subjective well-being domains. The source of this permanent income shock is a new means-tested non-contributory pension, the Silver Support Scheme (SSS). Using a difference-in-differences strategy, we find that pension recipients experienced improved life satisfaction upon announcement of the SSS; this rise was sustained after disbursement of SSS payouts. This improvement appears to be driven by social, household income, and economic satisfaction. 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 improved negligibly when an individual’s spouse received SSS payouts, while he/she did not.