Lurching economic progress

The June 2017 Social Weather Survey found 44 percent of families, nationwide, rating themselves as mahirap or poor. This means a 6-point recovery from the 50 percent Self-Rated Poverty (SRP) in March 2017, which had been a 6-point lurch from the 44 percent SRP of December 2016.

I suspect that the lurch was due to the return of annual inflation to 3 percent (“Poverty hits a bump,” Opinion, 5/6/17). The six points of the first-quarter lurch and the second-quarter recovery both exceed the national error margin of the Social Weather Surveys. SRP’s capability to rise or fall in a single quarter demonstrates the value of surveying it quarterly.

Poverty did change in the first year. In the first four quarters of the Duterte administration, the SRP rates were 42, 44, 50 and 44, averaging 45 percent. The start-off quarter was particularly good (“Poverty at historic low,” 10/15/16).

This implies progress in reducing poverty, given that SRP was 50, 50, 46 and 45, averaging 48 percent, in the last four quarters of the past administration. The government is welcome to claim credit for this progress, and thereby concede the validity of Self-Rated Poverty.

SRP fills in information gaps about poverty. The latest official poverty release, done in October 2016, refers to 2015 and is now two years old. The official 2015 poverty rate is an unrealistic 16.5 percent of families—much lower than the SRPs of 50-51 percent in 2015 because the official poverty line is very stingy. The medians of what poor households say they need for monthly home expenses so as not to feel poor are P20,000 in the National Capital Region (NCR), P15,000 in Balance Luzon, and P10,000 in both the Visayas and Mindanao.

The drop of official poverty between reference years 2012 and 2015 was expected by those familiar with SRP (“The poverty drop was anticipated,” 11/5/16). If, as it seems, 2018 is the next official reference year, then there will be no new official poverty release until mid-2019, two years from now. Without SRP, poverty analysts are virtually flying blind.

SWS has surveyed SRP quarterly since 1992, from semiannually in 1986-91 (www.sws.org.ph). SRP’s quarterly synchronization with the Gross National Product enables analysis of the inclusivity, if any, of economic growth.

What econometric research has found as the primary determinant of SRP is the rate of inflation in the cost of living. A secondary factor is underemployment. GNP growth has not figured, except that of the agricultural sector to a certain extent.

Gains and losses in poverty are uneven by area. The 6-point national drop in SRP in the second quarter of 2017 was due to downs of 16 points in Balance Luzon and 8 points in NCR, mixed with ups of 4 points in Mindanao and 7 points in the Visayas. SRP is so volatile that the small samples by area are adequate to detect change.

On the other hand, the earlier 6-point lurch in SRP in the first quarter of 2017 was due to poverty up in all areas: by 8 in Balance Luzon, 6 in Mindanao, 5 in NCR, and 1 in the Visayas.

The recovery after the lurch restored national SRP in the second quarter of 2017 to the level of the fourth quarter of 2016. What did change, over the first half of 2017, was the area pattern: SRP fell by 8 in Balance Luzon and by 3 in NCR, but rose by 8 in the Visayas and by 10 in Mindanao. Poverty fell in the north and rose in the south, so the national incidence was steady.

Surveys detect changes in poverty over time and by area and other dimensions. Finding reasons for the changes is separate.

Contact [email protected].