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Analysis of results. Main findings. 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. Main findings: expenditure. 3 largest components in IES 2005/6: housing transport
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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
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)
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
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
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)
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
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
% 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
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
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
Household consumption expenditure (%) excl. mortgage & imputed rent
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
Household consumption expenditure (%)excl. mortgage & imputed rent, by income quintile
Household consumption expenditure (%)excl. mortgage & imputed rent, by population group
Black African households’ share of each expenditure category
Household consumption expenditure (%)excl. mortgage & imputed rent, by province
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:
Food and non-alc. bev. as a % of household consumption expenditure, excl. mortgage & imputed rent and other uncl.
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
Food as a % of household consumption expenditureexcl. mortgage & imputed rent
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
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)
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)
Measuring inequality (2) Inequality among population groups:
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
Contribution of income from work & social grantsto income from these two sources
Gini coefficient estimates and the impact of taxation and social grants
Gini coefficient (total disposable income) by population group
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