Realistic living standards

The importance of realistic statistics came to the fore again this week, when Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) demanded an apology from the National Economic and Development Authority (Neda) for apparently setting an “insulting” budget of P127 per day for food as a living standard for a family of five.

ALU-TUCP decried a presentation on “TRAIN, Inflation, and Poverty” (6/5/18) by Neda Undersecretary for Policy and Planning Rosemarie Edillon, that had a table, “Monthly consumer basket of an average Filipino family,” adding up to P10,000, of which the Food and Non-alcoholic Beverages component was a measly P3,834. The objectionable P127 is P3,834 divided by 30 days.

The source of the mysterious round number of P10,000 was not stated by Neda. It is not last year’s official poverty line adjusted by the 4.6 percent year-on-year “headline inflation” in May, because there was no such line last year.  The last reference year for the line was 2015, when poverty was officially estimated from the 2015 Family Income and Expenditure Survey or FIES.

Using intervening inflation rates would be a simple way of updating the official poverty line, even as often as monthly, but the Philippine Statistics Authority (PSA) doesn’t do that. The PSA prefers to update its poverty line only when it updates poverty, and so it has no poverty line for either 2016 or 2017; the line will probably not reappear until after the 2018 FIES is analyzed, presumably in 2019.

A better basis for adjusting a poverty line would be the Consumer Price Index for Bottom 30% Income Households. The Bottom-30 index has been rising much faster than headline inflation. Its year-on-year inflation rate was 5.3 percent in 2018Q1, versus the average 3.0 percent in 2017.

Research of the UP School of Statistics shows that Bottom-30 inflation has more impact than headline inflation on Self-Rated Poverty, as surveyed quarterly by SWS.

P200 per day for food is realistic. The Social Weather Surveys always include the people’s thresholds for both general poverty and food-poverty (see www.sws.org.ph, 4/25/18). In the survey of March 23-27, 2018, the national median monthly thresholds are a home-expenses budget of P13,000 for the generally-poor (those who self-rated as mahirap) and a food-expenses budget of P6,000 for the food-poor (those who rated their food as mahirap). The latter implies a food budget of P200 per day.

By area, the latest median monthly thresholds of the food-poor are P8,500 in the National Capital Region (293 per day), P6,000 in Balance of Luzon (200 per day), P5,000  in Visayas (167 per day), and P8,000 in Mindanao (267 per day).

The latest food-poverty gap is a realistic P100 per day. The poverty gaps are the extra budgets that the poor say they need, over and above their current budgets, in order to escape their general poverty and food-poverty.

The latest median monthly food-poverty gap is P3,000 for the food-poor of the nation as a whole, i.e. P100 per day.  It is P2,600 in the NCR in particular (87 per day), P3,000 in Balance of Luzon (100 per day), P2,750 in Visayas (92 per day), and P4,750 in Mindanao (158 per day).

The food-poor are 29 percent of families in the country—the aggregation of 18 percent in NCR, 24 percent in Balance Luzon, 45 percent in Visayas and 31 percent in Mindanao. Note that Visayas has the most food-poverty, relative to population. But Mindanao has the deepest food-poverty, relative to need.

Contact [email protected].