Impact of cash transfer program on subjective wellbeing: evidence from Indonesia

Cash transfer programs have become the main poverty-alleviating policy in several developing countries. This paper analyzes the perceived impact of Direct Cash Assistance (BLT) as an Unconditional Cash Transfer (UCT) program in Indonesia by examining beneficiary households’ subjective wellbeing. Two rounds of Indonesian Family Life Survey (IFLS) panel data from 2007 (IFLS-4) and 2015 (IFLS-5) are used, from which this paper take the subjective wellbeing indicators. Three main categories of subjective wellbeing components are developed using Principle Component Analysis (PCA): family satisfaction, future perception, and children. OLS and fixed effect are used to determine the impact of UCT program on subjective wellbeing. The Indonesian UCT program is negatively correlated or has no impact on improving recipients’ subjective wellbeing compared to that of non-recipients. Out of the three subjective wellbeing components, family satisfaction appears to have received significant and positive impact from the UCT program. UCT may also help beneficiaries maintain stable consumption level during short-term economic shocks, but future perception and children’s wellbeing are not found to be affected.