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Consumption patterns and the black middle class: The role of assets

Author

Listed:
  • Sihaam Nieftagodien

    () (Western Cape Provincial Treasury)

  • Servaas van der Berg

    () (Department of Economics, University of Stellenbosch)

Abstract

Black consumption patterns differ from those of whites, even when considering income levels and household size. This applies particularly to the black middle class, the subject of intense public interest. This paper postulates that this difference results not from cultural differences in taste for middle class goods, but from an asset deficit experienced by blacks. We test this hypothesis using regression analysis based on the 2000 Income and Expenditure Survey. Once assets are considered, consumption of middle class goods by blacks even exceeds those of whites. One would then expect blacks to exhibit, compared to whites, (i) an asset deficit, (ii) an asset preference in purchases (to reduce the deficit), and (iii) a lag in consuming other middle class goods (if the asset deficit is not considered). Descriptive evidence, mainly graphical, from the All Media and Products Survey (AMPS) of 2004 provides support for the main hypothesis. This implies that, for black accruals to the middle class, a stage of asset accumulation would precede a stage of middle class consumption. But once assets have been acquired, the shift in consumption may be quite rapid. There may therefore remain two distinct groups of black middle class consumers: The established middle class (currently still quite small), who have accumulated assets and whose consumption patterns therefore would resemble those of whites; and the new middle class, who may prefer spending to acquire assets.

Suggested Citation

  • Sihaam Nieftagodien & Servaas van der Berg, 2007. "Consumption patterns and the black middle class: The role of assets," Working Papers 02/2007, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers33
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    File URL: https://www.ekon.sun.ac.za/wpapers/2007/wp022007/wp-02-2007.pdf
    File Function: First version, 2007
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    References listed on IDEAS

    as
    1. Sahn, David E. & Stifel, David C., 2000. "Poverty Comparisons Over Time and Across Countries in Africa," World Development, Elsevier, vol. 28(12), pages 2123-2155, December.
    2. Servaas van der Berg & Ronelle Burger & Rulof Burger & Megan Louw & Derek Yu, 2005. "Trends in poverty and inequality since the political transition," Working Papers 01/2005, Stellenbosch University, Department of Economics.
    3. Filmer, Deon*Pritchett, Lant, 1998. "Estimating wealth effects without expenditure data - or tears : with an application to educational enrollments in states of India," Policy Research Working Paper Series 1994, The World Bank.
    4. Steven F. Koch, 2005. "The Aid and Maid System: South African Data Pitfalls," Working Papers 200511, University of Pretoria, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. A. E. NDU OKO & Onuoha A. Onuoha, 2013. "After-Sales Services and Consumers¡¯ Perception of Quality: A Study of Refrigerator Users (Consumers) in South East Nigeria," Business and Management Horizons, Macrothink Institute, vol. 1(2), pages 56-83, December.
    2. Ronelle Burger & Cindy Lee Steenekamp & Servaas van der Berg & Asmus Zoch, 2014. "The middle class in contemporary South Africa: Comparing rival approaches," Working Papers 11/2014, Stellenbosch University, Department of Economics.
    3. Danielle Resnick & David Tschirley & Thomas Reardon & Michael Dolislager & Jason Snyder, 2015. "The Rise of a Middle Class in East and Southern Africa: Implications for Food System Transformation," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(5), pages 628-646, July.
    4. Ronelle Burger & Megan Louw & Brigitte Barbara Isabel de Oliveira Pegado & Servaas van der Berg, 2015. "Understanding consumption patterns of the established and emerging South African black middle class," Development Southern Africa, Taylor & Francis Journals, vol. 32(1), pages 41-56, January.

    More about this item

    Keywords

    Market definition; Delineation; Quantitative; Stationarity tests; Prices; Geographic; SSNIP; Hypothetical monopolist; Competition; Unit root; Price ratio; Antitrust;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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