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Analysis of results

This study provides insights into household income and expenditure patterns in 2005/6, highlighting the main findings of the analysis. It explores the distribution of income, major spending categories, inequality levels, and the limitations of income and expenditure surveys. Key points cover changes in income sources, expenditure composition, inequalities, and factors influencing spending patterns. The findings underscore the role of social grants in reducing inequality and demonstrate the impact of income on expenditure choices. The data reveals uneven growth in income across different income brackets, with notable shifts in expenditure on transport and food. The study also examines methodological challenges in survey data collection, respondent burden, and the trade-offs in survey design.

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Analysis of results

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  1. Analysis of results

  2. Main findings

  3. Main findings: income Income from work accounted for 74% of gross income in 2005/6 Real per capita income increased in each decile from IES 2000 to IES 2005/6

  4. Main findings: expenditure 3 largest components in IES 2005/6: housing transport food and non-alcoholic beverages Relatively slow change in spending patterns except for transport (increase since 2000) food and non-alcoholic beverages (decrease since 2000)

  5. Main findings: inequality Inequality remains high: average household income was 94 times higher in the top income decile than in the lowest income decile 10% of the population received over 50% of the income from work & social grants (2005/6) Social security grants play an important role in reducing inequality

  6. Limitations of income andexpenditure surveys

  7. Limitations of income andexpenditure surveys (1) Income and expenditure surveys are complex (detailed household information required) They are personal and intrude on people’s private lives Respondents may fail to report true values of information they regard as sensitive

  8. Limitations of income andexpenditure surveys (2) Burden on respondents is substantial, leading to fatigue Respondents may have poor recollection or records of income Concern over tax liability →deliberate under-reporting of income (and expenditure)

  9. Limitations of income andexpenditure surveys (3) Respondents may not understand income-related questions → poor income information Trade-off between changes in methodology / definition / geographic coverage and comparability over time For example, IES 2005/6 introduced diary, acquisitions, imputed rent

  10. Household income

  11. Components of household income, IES 2005/6

  12. Sources of income Income from work and social grants provided the most reliable estimates Close to national accounts (income from work) and National Treasury (social grants) Other items less reliable

  13. % change in mean real per cap income (excl. imputed rent) from IES 2000 to IES 2005/6 Growth in real per capita income in each decile Growth was uneven Above-average growth in deciles 1, 2, 3 and 10 Below-average growth in deciles 4 to 9

  14. Household consumption expenditure

  15. Composition of expenditure 3 largest components in IES 2005/6: housing transport food and non-alcoholic beverages Note “miscellaneous” in IES 2005/6 56,2% insurance 9,8% financial services 8,6% personal care

  16. Household consumption expenditure (%), IES 2005/6

  17. Changes in spending patternsfrom IES 2000 to IES 2005/6 Mortgage & imputed rent excluded for comparability over time Broadly similar expenditure patterns with two notable exceptions: Increase in transport Decrease in food & non-alcoholic beverages

  18. Household consumption expenditure (%) excl. mortgage & imputed rent

  19. Comparisons within IES 2005/6 Role of income in expenditure patterns E.g. inverse relationship between income and expenditure (as a proportion) on food, clothing E.g. positive relationship between income and expenditure (as a proportion) on transport, recreation Role of income clearly evident in comparisons by population group and province

  20. Household consumption expenditure (%)excl. mortgage & imputed rent, by income quintile

  21. Household consumption expenditure (%)excl. mortgage & imputed rent, by population group

  22. Black African households’ share of each expenditure category

  23. Household consumption expenditure (%)excl. mortgage & imputed rent, by province

  24. Transport

  25. Rapid growth in vehicle purchases Growth in real GDP per capita Employment growth → need for transport, & ability to finance cars Breakdown of purchases by population group:

  26. New car sales (NAAMSA) and real GDP per capita

  27. Composition of transport expenditure

  28. Food and non-alcoholic beverages

  29. Food and non-alc. bev. as a % of household consumption expenditure, excl. mortgage & imputed rent and other uncl.

  30. Assessment of change in food (1) Inverse relationship between income and food expenditure as a proportion of total expenditure Income↑ → food proportion↓ Evidence: countries at different stages of development; analysis by income decile in IES 2005/6 and in previous IESs

  31. Food as a % of household consumption expenditureexcl. mortgage & imputed rent

  32. Assessment of change in food (2) Different influences between recall and diary Telescopic effect in recall (+) Respondent fatigue in diary (-) Difference between diary and recall consistent with international evidence and Stats SA’s Post Enumeration Survey Example of telescopic effect: sugar purchases

  33. Percentage of households with non-zero sugar expenditure

  34. Assessment of change in food (3) Relatively consistent breakdown within food and non-alcoholic beverages compared with previous IESs, for example: Meat ranged between 26,8% (2000) and 28,4% (1995) Vegetables ranged between 9,3% (1995) and 10,4% (2005/6)

  35. Composition of food and non-alcoholic beverages

  36. Inequality

  37. Measuring inequality (1) Inequality remains high Average household income was 94 times higher in the top income decile than in the lowest income decile 10% of the population received over 50% of the income from work & social grants (2005/6)

  38. Distribution of income (work and social grants)

  39. Measuring inequality (2) Inequality among population groups:

  40. Measuring inequality (3) Inequality reflected in tax incidence 30% of households accounted for 95% of tax Social security grants play an important role in reducing inequality Deciles 1 to 4 derived over half their income from grants

  41. Incidence of income tax and mean effective tax rate

  42. Contribution of income from work & social grantsto income from these two sources

  43. Gini coefficient estimates and the impact of taxation and social grants

  44. Gini coefficient (total disposable income) by population group

  45. In summary … Increase in real per capita income in all deciles (2000 to 2005/6) Increase in transport and decrease in food & non-alcoholic beverages as proportions of total consumption (2000 to 2005/6) High degree of inequality, but reduced through social grants

  46. Questions and discussion

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