Dismal science, dismal research?

Most of the people in the world are poor, so if we knew the economics of being poor, we would know much of the economics that really matters. Most of the world’s poor people earn their living in agriculture, so if we knew the economics of agriculture, we would know much of the economics of being poor.”

Those are the first sentences of “The economics of being poor,” the 1979 Nobel Prize Lecture of Theodore W. Schultz (1902-1998), awardee for economics. Schultz was my teacher at the University of Chicago, where I had been sent by the University of Philippines (UP) Diliman to fill its faculty gap in agricultural economics. (I had already worked on farmer response to price for my master’s at the International Rice Research Institute. Schultz’s “Transforming Traditional Agriculture” was my favorite book.)

I remember trudging, head-down, after the great January 1967 snowfall in Chicago, to catch professor Schultz’s morning class. There was an old guy shoveling snow off his sidewalk. I said to myself he should stop before he gets a heart attack. He looked up; it was Schultz. “Oh, Mangahas, it’s you! Hold up, let’s walk together.” He soon chaired the committee for my thesis on the diffusion of high-yielding rice varieties in Central Luzon. A delightful teacher.

Fast forward to yesterday (3/31/23), when I gave a seminar titled “138 surveys of Philippine poverty: 1983-2022,” at my first worksite, the UP School of Economics. That’s a lot more knowledge—survey-knowledge, anyway—about poverty than most economists have, and the cause of more frustration in research.

Philippine poverty is dismal. In fact, ALL economic deprivation is dismal. Researching about it is like physicians researching on dreaded diseases. It’s tragic work but it needs to be done.

When first surveyed nationally in 1983, Self-Rated Poverty was 55 percent of households. Now, as of the Fourth Quarter of 2022, it is 51 percent, or only 4 points less than four decades ago. The time path of these national 138 surveys has been very rugged. Economic growth is hardly helpful to the poor. On the other hand, consumer price inflation is very harmful to them.

Of the 137 successive movements of poverty depicted by surveys, 44 percent were significant falls, 30 percent were significant increases, and only 26 percent were insignificant—indicating that it deserves to be monitored quarterly. Food poverty and hunger are likewise very volatile and deserving of rapid monitoring.

The all-time high Self-Rated Poverty was 74 percent in 1985—though it could have been higher in the first three quarters of 2020, when face-to-face surveying was interrupted. It was often in the 70s, 60s, and 50s, and several times in the 40s. Its all-time low of 38 percent in March 2019 was the one time it fell to the 30s. In 2022, the quarterly percentages of the poor rose steadily from 43 to 48 to 49 to 51—that 8-point rise between April 2022 and December 2022 is statistically significant. I wonder how many politicians are aware of this latest trend. I fear that most economists are also ignorant of it, even though it is regularly published every quarter, and picked up by the mass media.

Self-Rated Poverty is much more realistic than official poverty. The stated needs of the poor are quite reasonable. Half of the poor say they need only P15,000 per month as a budget for home expenses in order not to be poor; for half of them, their present gap is P5,000 per month. (Home expenses exclude transportation and all other expenses required for the process of earning a living.)

The food-poor are 34 percent of households, as of December 2022. Half of them say they need only P7,000 per month for food expenses in order not to be food-poor; for half of the food-poor, their present food-budget-gap is P3,000 per month.

The poor need reliable sources of food, especially the youngest children under 5 years old. That this needs to be funded by a loan from the World Bank, rather than by the regular budget, reveals the low priority given by legislators to the poor.

The poor lack basic education. Thirteen percent of household heads are elementary school dropouts; 28 percent are elementary graduates but did not finish junior high school. That makes 41 percent who can’t be expected to earn a decent wage.

There is survey evidence that the poor are not lazy. They do not fritter away ayuda into smoking, drinking, or gambling. Such research is not for teaching the poor, but for battling the prejudices of the middle and upper classes.

The poor are disadvantaged in all dimensions of human well-being. SWS surveys show that unhappiness and dissatisfaction with life also have serious ups and downs over time. They also show that these negative feelings are always more widespread among the poor than the non-poor. That’s not fair. That’s dismal.

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