Abstract
Social comparison has been found to be important for individual subjective well-being. However, so far the literature has tended to assess the effects of social comparison on public services by downplaying the significance of asymmetric comparison effects. Moreover, the literature tends to use cross-sectional data, and lacks national coverage. This dissertation investigates the role of social comparisons in determining the satisfaction of South African household’s with municipal water service delivery. We use a unique balanced-panel dataset from 2015-2017 with national coverage, from Statistics South Africa General Household Surveys. Unobserved heterogeneity is controlled by using the random effects model with a Mundlak term. Our results show a positive effect for receiving higher water reliability relative to a provincial reference group, but a negative effect for receiving higher water service reliability relative to a reference group defined by a smaller geographical area. Thus we find indications of rivalry between households at provincial level, but indications of altruism or risk sharing between closer neighbours. Moreover, we find evidence of both downward and upward comparison, with the latter having the strongest effect; comparison effects influence households differently. We conclude that since satisfaction with water service delivery seems to be strongly influenced by psychological and behavioural factors such as social comparison, satisfaction surveys serve a limited purpose as a foundation for public policy, as it is determined in part by factors that are unrelated to the actual service experienced by households. Our empirical evidence confirms this line of reasoning. The findings are robust for variety of reference groups.
M.Com. (Development Economics)