Abstract:
This paper applies the Lerman and Yitzhaki (1985) inequality decomposition approach
on food and non-food expenditures on the 2009/10 Botswana Core Welfare Indicator
Survey; and the 2015/16 Multi Topic Indicator Survey datasets with an objective to see
how overall inequality translates into inequality within each expenditure component.
To test for a robustness of our results, we apply a simple bootstrap procedure to obtain
the means, standard errors and confidence intervals for the component Gini coefficients
estimates. The decomposition analysis results show that overall inequality based on the
Gini coefficient of consumption expenditure within the groups has increased between the
two periods from 0.498 to 0.533. These results suggest that this rise in overall expenditure
inequality is due to the increased burden in the household budget of non-food spending,
which tends to be more unequal than food spending. The consumption expenditure is very
unequal on non-food items like recreation and hotels; health; education and transport.
On one hand, lower Gini coefficients are observed for food; and clothing and footwear;
these commodities are considered as necessities among others. This paper finally offers
some possible policy measures to curb this consumption expenditure inequality.
