Economic Resources Data Collection and Measurement

1. Economic Resources Data Collection and Measurement South Africa case Study UN EXPERT GROUP MEETING 9TH September 2008 Kefiloe Masiteng

2. INTRODUCTION • Detailed income and expenditure data have been enumerated in South Africa’s Income and Expenditure Surveys (IES) in 1995, 2000 and 2005 • Used to establish the weights in the basket of goods to construct the Consumer Price Index (CPI). • Traditionally data has been collected by the “recall” method, whereby respondents are confronted with a set of questions, prompting them for past expenditures in a specified period • substantial fall in food shares registered in IES2005 compared to the previous surveys

3. Approach and Background • Changes in estimates based on surveys are as much a product of behavioural changes of respondents as they are of changes in survey design • It is therefore useful in the current setting to have two “recall surveys” (IES1995 and IES2000) and one mixed (recall and diary) survey (IES2005) to aid comparison • The implementation of the diary was motivated precisely due to concerns that data quality needed to be improved • In particular, frequently consumed items are believed to be more accurately recorded in a diary compared to the recall method

4. HOUSEHOLD BUDGET SURVEYS • The IES fieldwork was conducted during the period September 2005 to August 2006 • IESs of 1995 and 2000, when a recall method was used, the latest IES made extensive use of diaries in which respondents recorded their results • The primary purpose of the 2005/06 IES was to provide an updated set of weights for the consumer price index (CPI) • The secondary objective was to provide relative information on private consumption expenditure for the national accounts

5. HOUSEHOLD BUDGET SURVEYS • Given the wealth of information provided by the IES, it will undoubtedly be used for a wide variety of other purposes from marketing intelligence to academic research and to public policy • 2001: Measuring poverty in South Africa • Poverty mapping using census 1996, IES 1995 and GHS 1995-1999 • Discussions to have a survey for non-monemetric side of poverty……Measuring wellbeing….Quality of life

6. HOUSEHOLD BUDGET SURVEYS

7. CONCERNS • A number of survey design concerns arise when considering the choice between recall and diary methods • At the start of the exercise respondents were probed about expenditures by recall method (which was expected to result in noisy estimates as a result of poor recollection) • Then a diary survey commenced to obtain baseline estimates • measurement error (assuming that diary values are true) is negatively correlated with the true values; this implies that low earners committed larger errors when prompted by recall methods • However acknowledged that the diary also suffered from measurement error in the form of fatigue

8. Complexities of Household Budget Surveys • Well designed schedule and phasing in of various aspects of the HBS, and ensuring that thorough research and analysis have been done on the data pre-release • The need for clear communication to users and the public, in general • Income and expenditure surveys are some of the more difficult household surveys to collect, by virtue of the personal nature of detailed data that has to be extracted from respondents • Downward bias in measures of income • Attempting to assess both income and expenditure simultaneously becomes even more complex

9. ACTIVITIES

10. BROAD AREAS • Economic Wellbeing • More work can be done on the current wealth of data to provide a baseline for income and expenditure to measure economic well being • Living conditions of the poor in SA • 2000 focus: access to adequate housing, characteristics of dwelling units, access to basic services • What can be an integrated model for South Africa in dealing with this area of poverty termed asset poverty? • Life Circumstances • Looks at individuals and their life circumstances: specifically to health, education and employment • There is a need for an integrated evaluation framework of the three sectors and their contribution to poverty reduction

11. BROAD AREAS- CONT • Development Indices • 2 indices in 2000: Household Infrastructure Index and Household Circumstance Index to describe the extent of development of different geographical areas in South Africa • Inequality • Measures are confined to earned income • Further work required to measure the role of state in supporting households through social security net • Social Accounting Matrix • This is a presentation of national accounts in a matrix to elaborate the linkages between supply and use (SU) tables and institutional sector accounts, presented in the system of National Accounts (SNA)

12. Other sources • General household surveys • Census 1996 and 2001 • Community survey 2007 • Census 2011 • Should income data be collected through censuses? • Once the above are taken into consideration, challenges around comparability of estimates arises…………………….Which one is more accurate?

13. LESSONS • Poverty is a complex concept • a multi-dimensional phenomenon • relatively easy to recognize people or communities experiencing some dimension of poverty, • a universally agreed definition of poverty is an elusive concept which elicits heated debate. • from a statistical point of view, there are certain standards – backed by rigorous theory and practice – that are now accepted as good practice in measuring, analysis and reporting on poverty.

14. Limitations • Continuous measurement • Poverty Statistics • National Accounts • Economic vs social measures • Search for relevance • What policy areas to address • Macroeconomic policy development • Social policy development • Disagregation by population groups

15. WAY FORWARD • Moving towards three yearly continuous collection of household data • 2008/09: Living conditions survey tries to include poverty measurement in as a multidimensional phenomenon • Recall and Diary: Income and expenditure • Community questionnaire : Perceptions • Household questionnaire : subjective poverty • 2010: Income and Expenditure Survey • CPI reweighting • private consumption expenditure for the national accounts • System of poverty indicators within the social statistics Programme