Poverty has dropped since 2014

On an annual basis, poverty has now dropped for two years in a row. In the four quarters of 2016, the families reporting themselves as poor (mahirap) were 46, 45, 42 (the all-time low), and finally 44 percent in the last quarter, as reported by SWS last week.  This makes 44 percent the average for the entire year 2016.

The average 44 percent in 2016 follows averages of 50 in 2015, and 54 in 2014. That’s a total of 10 points in two years. The six-point drop from 2015 to 2016, and the four-point drop from 2014 to 2015 were both statistically significant. Each annual average comes from a pool of four national surveys of 1,200 families each, or 4,800 families in the whole annual pool. The approximate error margin is three points for each quarterly survey, and only 1.5 points for the annual pool.

SWS reports the same trend for self-rated food-poverty (the percentage reporting that their food is poor).  In the four quarters of 2016 these were 31, 31, 30, and finally 34, averaging 32 for the whole year.  One shouldn’t make much of the small increase from the third to the fourth quarter of 2016—either for food-poverty or for total poverty—unless the increases continue in 2017.

Food-poverty averaged 35 percent in 2015 and 41 percent in 2014—i.e., a three-point drop from 2015 to 2016, after a six-point drop from 2014 to 2015.  The annual drops are significant, so of course more so is the two-year drop.

I’ve been warning my economist friends in government that the rate of inflation in the cost of living should be kept below 2 percent in order for the favorable trend in poverty to continue. Inflation harms the poor; growth in per capita GNP, even if adjusted for inflation, doesn’t counter it.

Note that the SWS figures are up to date, whereas the latest official figure on poverty dates from 2015 yet. See “The poverty drop was anticipated” (Opinion, 11/05/16), which discussed the official three-year drop between 2012 and 2015. The official release was silent about poverty in 2013 and 2014, due to reluctance to compare the Family Income and Expenditure Surveys  of 2012 and 2015 to the two Annual Poverty Indicator Surveys (Apis) of 2013 and 2014.  If an Apis was done in 2016, the results can’t be ready until October.

The SWS poverty tracking system has never changed, unlike the official system which has reduced its poverty line at least twice (see “The lowering of the official poverty line,” Opinion, 2/12/11). The official line, and the official poverty incidences it engenders, are unrealistic—ask the people, and see.

The poverty trend since 2014 is not attributable to the Duterte administration, since two quarters is too soon to expect effects from any new economic policies. It should be interpreted simply as the legacy of the previous regime, or the starting trend from which to begin.

The average 44-percent self-rated poverty of calendar year 2016 is the starting point of Mr. Duterte’s administration.  That of Noynoy Aquino’s administration was the average 48 percent in calendar year 2010. I would put the starting point of Gloria Arroyo’s administration at the 62 in 2001, that of Joseph Estrada’s administration at the 61 in 1998, that of Fidel Ramos’ administration at the 66 in 1992, and that of Cory Aquino’s administration at the 67 in 1986. Despite intense volatility in the in-between years, poverty generally declined over time.

Maintaining the favorable poverty trend calls for: 1) keeping inflation low, 2) expanding the conditional cash transfer program, 3) implementing the K-to-12 educational system, and 4) making family planning accessible to all.

Contact mahar.mangahas@sws.org.ph.