Subjective health, well-being and cognitive capabilities

Abstract

The existence of the relationship between poverty and poor health has been known for ages, although the actual mechanisms that connect poverty to health have not been well understood. A growing body of literature indicates that unemployment (which often goes hand in hand with poverty) can pose substantial health risks by negatively affecting, in particular, the mental health, psychological well-being and cognitive capabilities of those who experience it (for example, Acevedo et al., 2020; Wahrendorf et al., 2019; Wanberg, 2012; Pelzer et al., 2014; Van der Noordt et al., 2014; Kim and von dem Knesebeck, 2016). Moreover, we know that the psychological, social and economic dimensions of well-being are strongly interconnected. Unemployment usually leads to a lack of financial resources, and financial resources serve as an important determinant of well-being (Paul and Moser, 2009). Unemployment can also decrease life satisfaction and happiness by means other than income, such as reducing social participation (Kunze and Suppa, 2017). From a practical perspective, whether we can govern the complex relationship between poverty and well-being through a policy action is an important question. Unconditional cash transfers (UCT) are one potential group of policy instruments for organising social security. UCTs are regular cash transfers that are paid without screening for eligibility and without income-testing or means-testing. Earlier studies have indicated that the introduction of a UCT policy could improve population health. For example, Forget (2011) reports positive results from a Canadian experiment with a guaranteed annual income. Another body of evidence suggests that UCTs may improve some health outcomes in low and middle-income countries, although the relative effectiveness of UCTs and conditional cash transfer programmes (CCT) remains uncertain (for example, Costello et al., 2003; Davala et al., 2015; Pega et al., 2017).