The opportunity cost of household transport expenditure in South Africa

Abstract

Background: Transport affordability is a significant concern for South African households, who spend nearly a fifth of their budgets on transport. Contributing factors include a lack of affordable public transport options and spatial mismatch. Since 2015, stagnating national budgets and a declining share allocated to the transport portfolio have exacerbated household transport expenses, limiting economic mobility.

Objectives: This article examines how changes in household transport expenses impact other essential expenses such as food, housing, clothing, recreation and education. Understanding these expenditure trade-offs provides insights for policy, especially as the National Public Transport Subsidy Policy is being prepared.

Method: Using data from the Living Conditions Survey of 2014/2015, the study applies fractional logit regression models to estimate the impact of varying household transport expenses on other expenditure categories across diverse household demographics.

Results: Findings indicate that increased household transport expenses significantly reduces allocations to essential items, notably food and housing, with the effects varying by income level, settlement type, and household composition.

Conclusion: A core recommendation is to reduce transport expenses for low-income households through government intervention as this will increase these, mostly previously disadvantaged households’, economic mobility.

Contribution: Results show that if low-income households allocate no more than 10% of their expenditure budgets to transport, they could potentially increase their expenditure share on food (+1.30%) housing (+1.18%) clothing (+0.86%) recreation (+0.31%) and education (+0.08%).