A second look at measuring inequality in South Africa: a modified Gini coefficient

The distribution of income and wealth in South Africa is core to political debate in the country. At the heart of the debate is the Gini coefficient, which is the international standard for measuring the distribution of income and wealth in a country. This research paper compares the Gini coefficient calculated for South Africa with international best practice, and with the coefficients calculated for other countries. Furthermore, the paper analyses specific government actions and policies that would reduce inequality through producing a modified Gini coefficient.

The paper firstly differentiates between income (salaries, wages, rents, etc) and wealth (households’ capital assets), underlining that it takes into consideration income from social pensions in income calculations. Consequently, the document indicates the common idea that South Africa has one of the greatest disparaties between the rich and the poor in terms of income and wealth distribution (very high Gini coefficient). However, the research results show that the true Gini coefficient for South Africa resides at much lower levels of inequality than generally reported. The author deems the reason for this is that the impact of government social policies on inequality is substantial, but often overlooked.

All things considered, the paper suggests that:

• the government’s redistribution initiatives have achieved considerably more success over time than is immediately evident 
• for future research, it might be useful to consider additional income surveys such as the National Income Dynamic Study (NIDS)