Social Climate

Economic pain abates

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IN THE second quarter of this year, the SWS statistics on economic well-being are not so gloomy, and show a substantial, though partial, recovery in the setbacks to economic well-being felt by Filipinos in the first quarter (see my “Painful statistics,” Inquirer, 5/12/2012).

Last Thursday’s top story in BusinessWorld, “Gains noted in poverty poll,” was about the fall in the proportion of families rating themselves “mahirap” (poor) to 51 percent of families in the Social Weather Survey for 2012Q2, fielded last May 24-27, compared to 55 percent in our survey for 2012Q1, done over March 10-13.

(The 55 percent of 2012Q1 was inadvertently called a “hunger” score in the BW item, and actually refers to poverty. Hunger is a separate concept, for which the SWS findings for 2012Q2 are also for first publication by BW. Obviously, consistent with the drop in poverty, there was also a drop in hunger. Watch for the new SWS hunger numbers next week.)

In absolute numbers, the drop in general poverty in the second quarter amounts to an estimated 800,000 households, nationwide.  This is based on the National Statistics Office’s projected national population at 20.35 million for 2012, and the latest NSO average of 4.76 persons per household, as of August 2007.

Poverty is volatile. To me, one of the most important advantages from quarterly monitoring of poverty is the discovery of just how volatile it is. Poverty is not a fixed status; it changes relatively quickly.  Although some families might always feel they are poor, and some might always feel they are not, there are also those who feel poor at present but not previously, and those who don’t feel poor now but used to feel poor before.

General poverty. Self-rated poverty made a 4-point recovery from its 10-point increase between 2011Q4 and 2012Q1.  The recovery was by 7 points in Mindanao (now 65 percent self-rated poor, in the second quarter), by 5 points in the National Capital Region (now 41 percent poor), by 4 points in the Visayas (now 57 percent poor), and by 2 points in the rest of Luzon (now 43 percent poor).

The recovery occurred primarily in rural areas, where self-rated poverty fell by 5 points. In urban areas, on the other hand, it rose by 2 points—implying that the slight increase in urban poverty happened entirely outside NCR.

Food-poverty. Those who self-rated their food as “mahirap” or poor dropped from 45 percent in the first quarter to 39 percent in the second quarter.

This means a large 6-point recovery from the 9-point setback in food poverty between 2011Q4 and 2012Q1. It amounts to a reduction in the food-poor by an estimated 1.2 million households, compared to the previous quarter.

Area-wise, the drop in food-poverty was by 11 points in Mindanao (now 53 percent food-poor), by 6 points in the rest of Luzon (now 32 percent food-poor), by 5 points in Metro Manila (now 25 percent food-poor), and by 1 point in the Visayas (now 46 percent food-poor).

Monetary thresholds for poverty and food-poverty. The self-rated poverty question is addressed to household heads.  Those that rate their family as poor are then asked how much money they would need for a monthly budget for home expenses in order not to feel that way anymore.

The answer to this question is called the self-rated poverty threshold. It varies from household to household, depending mainly on location (because of the geographical variation in consumer prices) and the number of members of the household. It tends to increase over time, but usually not as fast as the rate of inflation, meaning that people tend to tighten their belts, and try to make do with the same budget despite the increasing cost of living.

The median poverty threshold is the amount that one-half of the self-rated poor say is sufficient to bring them out of poverty.  For 2012Q2, the median poverty thresholds are P15,000 per month in the National Capital Region, P10,000 per month in both Visayas and Mindanao, and P9,000 per month in the rest of Luzon. These are bottom-up “poverty lines,” set by the people themselves; I think they are both realistic and modest.  Poor people are not greedy.

The household heads that rate their family’s food as poor are likewise asked how much money they would need for a monthly budget for food in order not to feel that way anymore. Their answers are self-rated food thresholds.

The median food threshold is the amount that would bring the poorer half of the food-poor out of food-poverty. For 2012Q2, the median food thresholds are P7,000 per month in the National Capital Region, P5,000 per month in both Visayas and Mindanao, and P4,500 per month in the rest of Luzon. These bottom-up food-poverty lines are realistic and modest.

Determinants of poverty. To me, the movements in poverty are not due to mere swings in people’s moods, but are due to real conditions on the ground. The poverty spike in the first quarter was surely due to some extent, and especially in Mindanao, to the destruction wrought by Tropical Storm “Sendong” in the last quarter of 2011.

Historically, inflation in consumer prices, particularly food prices, has the strongest connection to poverty. Underemployment is next. Recent research suggests that agricultural production and government spending are also important; these components of the Gross National Product are more relevant than GNP as an aggregate.

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Contact SWS: www.sws.org.ph or mahar.mangahas@sws.org.ph.

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