Buried in debt
A new NBER paper on funerals in South Africa.
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.
In light of increased death rates due to AIDS, these findings are troubling:
These results do not lead us to optimism on the impact of the AIDS crisis on the future economic wellbeing of South Africans…we add evidence that households are taking what, in other circumstances, could be productive capital and using it on coffins, meat and groceries to bury their dead.
