Paying the Piper: The High Cost of Funerals in South Africa

Anne Case, Princeton University
Alicia Menendez, University of Chicago
Analia S. Olgiati, Princeton University
Anu Garib, University of Kwazulu-Natal

We analyze funeral arrangements following the deaths of 3,751 people 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 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 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.