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Income and Price Elasticities of Demand in South Africa: An Application of the Linear Expenditure System

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  • Rulof Petrus Burger
  • Lodewicus Charl Coetzee
  • Carl Friedrich Kreuser
  • Neil Andrew Rankin

Abstract

This paper investigates the expenditure patterns of South African households using detailed cross†sectional expenditure and price data that varies across region and time. Linear expenditure system parameter estimates are used to calculate income and price elasticities for a number of product categories at different points of the income distribution. We find substantial variation in the price and income elasticities of demand for items across the income distribution, with the bottom quartile being extremely sensitive to increases in the price of food and clothing items, and the top quartile being as sensitive as households in developed countries.

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  • Rulof Petrus Burger & Lodewicus Charl Coetzee & Carl Friedrich Kreuser & Neil Andrew Rankin, 2017. "Income and Price Elasticities of Demand in South Africa: An Application of the Linear Expenditure System," South African Journal of Economics, Economic Society of South Africa, vol. 85(4), pages 491-514, December.
    • Handle: RePEc:bla:sajeco:v:85:y:2017:i:4:p:491-514
    DOI: 10.1111/saje.12167
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    6. Margaret Chitiga & Martin Henseler & Ramos Emmanuel Mabugu & Hélène Maisonnave, 2022. "How COVID-19 Pandemic Worsens the Economic Situation of Women in South Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(3), pages 1627-1644, June.
    7. Chloe Allison & Neryvia Pillay, 2024. "Cash transfers and prices what is the impact of social welfare on prices," Working Papers 11057, South African Reserve Bank.
    8. Vincent Linderhof & Marieke Meeske & Vasco Diogo & Anne Sonneveld, 2021. "The Impact of Water-Related Pollution on Food Systems in Transition: The Case of Northern Vietnam," Sustainability, MDPI, vol. 13(4), pages 1-23, February.
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