The Cost of Funerals in South Africa

We analyze funeral arrangements after the deaths of 3,751 people who died between January 2003 and December 2005 in the Africa Centre Demographic Surveillance Area. We find that, on average, households spend the equivalent of a year’s income for an adult’s funeral, measured at median per capita African (black) income. Approximately one-quarter of all individuals had some form of insurance, which helped surviving household members defray some fraction of funeral expenses. However, an equal fraction of households borrowed money to pay for the funeral. We develop a model, consistent with ethnographic work in this area, in which households respond to social pressure to bury their dead in a style consistent with the observed social status of the household and that of the deceased. Households that cannot afford a funeral commensurate with social expectations must borrow money to pay for the funeral. The model leads to empirical tests, and we find results consistent with our model of household decision making.

From a paper by Anne Case, Anu Garrib, Alicia Menendez, & Analia Olgiati. A draft is here. 

The social norms  

It would be difficult to exaggerate the importance of funerals in South African life. Funerals serve to honor the dead, who are entering a new life as ‘ancestors.’ In addition, funerals mark the deceased’s status (and that of his family) within the community. They also strengthen ties with neighbors and extended family, who may travel long distances to attend the funeral. More than any other single rite of passage – births, graduations, marriages – funerals provide a focal point for family and community life. (See Roth 1999 for discussion.) (p. 5)

For some or all of these reasons, funerals are elaborate, and expensive. In addition to expenses for a coffin, traditional burial blankets, and (often) a tent for the funeral, immediate family must pay to entertain mourners. After a death, extended household members may arrive for a lengthy visit. It is expected that the immediate family of the deceased will feed mourners who have come for the funeral, for as long as they choose to stay. In addition, animals are slaughtered to honor the dead. Precise customs vary from place to place, but in KwaZulu-Natal, when an adult male dies, general custom is to kill a cow, and to use its meat to feed all present. This is an expensive proposition: cattle during this period sold for approximately 2000 Rand a head.3 With median per capita income among Africans (Blacks) approximately 400 Rand a month, the cow represents more than a third of a year’s income for half the African population. When an adult female dies, a goat is slaughtered. While less expensive than a cow, this is still a considerable expense for the household (p. 5).

Great read for a class on culture and economics (or finance).

Airlines in Africa

Wikimedia Commons

The regulatory framework in Africa in which international airline groups operate is far from uniform. Although several African states have embraced the principles of liberalization with regard to the African market and intra-African air transport, intercontinental routes are still often subject to strict protectionist policies. In order to protect their national carriers, many African governments continue to opt for restrictive regulations in terms of market access, seat capacity and frequency of services. Thus, air transport between Europe/the US and Africa is still based on the complex system of strict bilateral agreements negotiated separately by pairs of countries. Because such policies, by their nature, impose limitations on the volume of tourist traffic, they often have a detrimental influence on the development of tourism and thus also on regional growth in Africa. Only recently have some more liberal African governments started negotiating open skies bilateral agreements with selected European countries and the US. However, it should not be assumed that, if the liberalization and deregulation of air transportation in Africa progresses, the increased tourist traffic will automatically foster economic development in African tourist destinations. P. 26

That paragraph is from a paper by Piotr Niewiadomski.

And more

The role of national authorities can also be critical in owning, or co-owning, national airlines and related infrastructure such as airports. If this is the case, their tendency to protect national airlines and thus to opt for protective bilateral agreements can be very strong. By 1991, almost all African carriers had been owned by the state (Schlumberger 2010). Currently, as many as 25 African states have fully or partially state-owned carriers. While 20 of them are relatively weak competitors in the market, the national airlines of Egypt (Egyptair), Morocco (Royal Air Maroc), Kenya (Kenya Airways), Ethiopia (Ethiopian Airlines) and South Africa (South African Airways) are the strongest carriers in Africa (Schlumberger 2010). Out of the three focal states, only Uganda does not currently have a state-owned airline.

Regarding airports and air navigation services, the situation in Africa is even more complex. In contrast with South Africa, where airports and air navigation services were privatized in the early 1990s (Goldstein 2001; Prins and Lombard 1995), air navigation services and airports in Kenya and Uganda are still in the hands of the government. Thus, in Uganda all airports are owned by the Civil Aviation Authority of Uganda – a state agency of the Ministry of Works and Transport. In Kenya, airports are owned and managed by the Kenyan Airport Authority, while navigation services are provided by the Kenyan Civil Aviation Authority – both having the status of state corporations overseen by the Ministry of Transport. Meanwhile, in South Africa, airports are owned by the Airports Company South Africa (ACSA), whereas air navigation services are provided by the Air Traffic and Navigation Services Company, both established by the state and privatized in the 1990s (see Goldstein 2001; Prins and Lombard 1995). P. 20.

HIV Status and Labor Market Participation (South Africa)

We find that being HIV-positive is associated with a seven percentage point increase in the likelihood of being unemployed. South Africans with less than a high school education are close to 11 percentage points more likely to be unemployed if they are HIV-positive. HIV status confers a disadvantage despite high unemployment rates, and reinforces existing inequalities in South Africa.

From the paper "HIV Status and Labor Market Participation in South Africa" by Levinsohn et al., forthcoming in the The Review of Economics and Statistics. A 2009-draft is here. 

Property Rights and Economic Growth: Evidence from a Natural Experiment

The importance of institutions for economic growth has been widely explored in the economic literature. One example of an institution is the existence of private property. Another example, in the case of a social institutions, is the type of religion that is practiced in a country or a society. Obviously Muslim countries have a different institution than Catholic countries when it comes to religious practices. It turns out that institutions matter for economic growth. Meaning that some institutions are more conducive to economic growth than others.  The Paper "Property Right and Economic Growth: Evidence From a Natural Experiment" by Brunt claims to be the first one to explore the link between the institution of private property and growth using a case study. It claims that the establishment of private property in the Cape colony by the British had very positive effects on economic growth. 

This is the abstract:

In 1795 the British took control of the Cape colony (South Africa) from the Dutch; and in 1843 they exogenously changed the legal basis of landholding, giving more secure property rights to landholders. Since endowments and other factors were held constant, these changes offer clean tests of the effects on economic growth of colonial identity and secure property rights. The effects of both changes were immediate, positive and large. Other legal and institutional changes, such as the move to a common law system in 1827, had no such effects on economic growth.

This is the conclusion:

We find that improving the security of property rights in land had an immediate, positive and large effect on the rate of growth of output and productivity – just as LLSV would predict and just as Adam Smith was arguing back in 1776. After the transformation of property rights the Cape changed from being the worst-performing colony to being the best-performing colony in terms of economic growth.

The paper is worth reading and makes a pretty good review of the literature.  
LLSV refers to the papers written by Rafael LaPorta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny, cited in Brunt's article.