1. Economic Resources Data Collection and Measurement South Africa case Study UN EXPERT GROUP MEETING 9 TH 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. 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 HOUSEHOLD BUDGET SURVEYS

6. DataProductUse CPI-related expenditure items a) CPI re-weighting based on weights of relevant products for the country b) Provincial estimates are aggregated to the national levels a) CPI that has more currency and in the process better realignment of consumption expenditure changes with inflation or price changes. Comprehensive data on changing expenditure patterns including non- consumption data (investments, savings) a) Total consumption expenditure for national accounts purposes a) Report on consumption patterns in South Africa c) Detailed expenditure by race and province d) Variance in expenditure e) Household size vs. expenditure a) National accounts benchmarking. indication of cost of living. b) Consumption behaviour by race, income group, etc c) Poverty lines Income a) Report on income distribution and changes in South Africa b) Income sources b) Measures of absolute and relative income. c) National accounts income surveys d) Income by deciles

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 ActivityPublication 1. Contribution to Antipoverty strategy Poverty diagnostics 2. Establish a national poverty linePoverty Monitoring 3. Establish a poverty survey seriesStatistical release 4. Construct a poverty profilePoverty Profile Development Trends (census) 5. Community MappingReport based on poverty matrix

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