South African poverty lines: a review and two new money-metric thresholds

Abstract

Unlike some other countries, there is no legislated poverty line for South Africa. Various absolute poverty lines exist, but there has been little analysis of the methodological decisions underpinning each line. There is no consensus as to which line is best. This paper critically reviews existing South African poverty lines and introduces two new money-metric thresholds. These poverty lines are created according to Ravallion’s (1994) Cost of Basic Needs method and use a combination of household survey data, caloric information for various foods, and price data. Our methodology is described in depth, and the implications of unavoidable methodological decisions are discussed. The theoretical foundations of the method are also examined, and it is argued that the lower-bound poverty line is not conceptually coherent and is not appropriate for poverty measurement. The upper-bound and food poverty lines remain worthwhile, however. The implications of these lines for rudimentary estimates of poverty are then examined, using the 2010/2011 Income and Expenditure Survey.