Why we calculate relative numbers

As discussed, relative numbers are often more useful than absolute numbers when making comparisons.

Consider this: According to StatsSA, in Gauteng 2 860 450 people live below the poverty line. In Mpumalanga, 1 980 150 people live below the poverty line.

Where are you more likely to be living below the poverty line?

Now consider this: According to StatsSA, in Gauteng, 19% of people live below the poverty line. In Mpumalanga, 43% of people live below the poverty line.

Both of these statements are, of course, true. Even though Gauteng has a total population of people living below the poverty line that is almost 50% higher than in Mpumalanga, when we compare these numbers to the total population of each province (as a percentage), we can see that poverty is a huge problem in both provinces, but affects a far greater number of people relative to the total population in Mpumalanga.

Working with relative numbers

Here's another example.

For the financial year ending February 2021, the City of Johannesburg budgeted to spend R69bn in services and capital expenses. For the same period, Msukaligwa municipality in Mpumalanga planned for R0.78bn of spending.

By themselves, these two absolute numbers don't really tell us much at all, other than the fact the City of Johannesburg spends much more than Msukaligwa. But we'd expect that if we know anything at all about South Africa - there are many more people in Johannesburg who require municipal services than in Msukaligwa.

In order to start analysing these two numbers, we need to make them relative to something.

The best population estimate we have for Joburg is 4 434 827 people, while for Msukaligwa it's 149 378.

With these two extra data points, we can now start making fair comparisons. For example: Msukaligwa's budget is 1.1% of Johannesburg's. We can calculate this using this formula (0.78÷69) x 100. The population of Msukaligwa is 3.3% the size of Johannesburg, however (0.78÷69) x 100.

We can understand this a bit better by working out the ratio of spending to population, ie. the amount of money budgeted to be spent per person (also known as per capita) over the course of the year.

We can calculate this as Total Spending ÷ Number of People.

Johannesburg (R69 000 000 000 ÷ 4 434 827) = R15 559 per capita

Msukaligwa (R780 000 000 ÷ 149 378) = R5 221 per capita

In other words, the City of Johannesburg budgeted to spend almost three times as much per person as Msukaligwa in the financial year.

There is, of course, other context for these numbers. City of Johannesburg may have more roads to maintain and generates more income from taxpayers - but such a large discrepancy should certainly get us asking questions.