Comparing alternative measures of household income: Evidence from the Khayelitsha/Mitchell's plain survey

Abstract

Household income is widely used for economic and sociological analysis, yet little emphasis has been placed on the optimal way to gather household income data. The Khayelitsha/Mitchell's Plain Survey provides a unique opportunity to explore alternative ways of measuring household income. This study compares the estimates obtained from a household module with those obtained from detailed income data collected in the adult module of the survey. Estimates derived from individual income data tend to be higher and have greater variation than those obtained from the household module. This difference between income estimates has a material impact on the secondary analysis of income data. The Gini coefficient, a simple measure of income-inequality, is used in this study to illustrate how household income measured at the household level underestimates household income inequality.