No inclusivity yet

In the phrase “inclusive growth,” the key word is “inclusive,” not “growth.” Unless economic growth is inclusive, meaning that it benefits the lower classes, let us not make so much propaganda about it.

When only the upper classes (definitely) and the middle classes (possibly) are getting better off, it is inconsiderate, if not outright cruel, to be boasting about how fast the Gross National Product grows.

We know that economic hardship is unabated, from Social Weather Stations’ latest quarterly reports on economic deprivation, “Families rating themselves as Mahirap or Poor stay at 55%,” and “Hunger rises to 22.0% of families; Moderate Hunger 17.6%, Severe Hunger 4.4%,” based on the SWS national survey of Sept. 26-29, 2014 (see www.sws.org.ph, for 10/27/2014 and 10/29/2014).

Stubborn poverty. The stability of self-rated poverty at 55 percent (for the Philippines as a whole), from last June to last September, resulted from worsenings in the National Capital Region (up by 6 percentage points, to 43 percent) and the Rest of Luzon (up by 7 points, to 52) that were offset by improvements in the Visayas (down by 9 points, to 65) and Mindanao (down by 10 points, to 61). The geographical changes are meaningful since the sampling error in each area is 6 points.

In 2013, from September to December, self-rated poverty rose from 62 to 68 percent in the Visayas, and from 50 percent to 55 percent nationwide. By separating families victimized by Supertyphoon “Yolanda” (with an expanded sample size in December), I would put national poverty at only 52 percent in December, if not for the disaster (see “Poverty, hunger and ‘Yolanda,’” Opinion, 1/25/2014). Thus, it is clear that present poverty has not yet recovered to pre-Yolanda times.

Aside from the work of SWS, as yet there are no statistics about poverty after Yolanda struck in November last year. The most recent official figures, released in April 2014, refer to the first semester of 2013.

Does this mean that the next official reading of poverty will refer to the first semester of 2014, and be seen only in April 2015, six months from now? Will the succeeding official poverty report refer to the first semester of 2015, and be seen only in April 2016? Has the government been able to estimate the effect of Yolanda on poverty, whether by using the quarterly statistics on economic growth or any other statistics?

The recent upgrade of the frequency of official poverty measurement from triennial (during 1985-2012) to annual (2012-2013) was a good reform of the government’s data system, but now I think it did not go far enough. The measurement should be done more often. The official Labor Force Survey, which is quarterly, is capable of doing it.

The recent rise in hunger. The second SWS report last week said that Moderate Hunger (i.e., once or sometimes) rose by 4.1 points, and Severe Hunger (i.e., often or always) rose by 1.6 points, between last June and last September.

Over the last two quarters, Hunger got worse even while poverty was stable, because the hungry proportion among the poor got worse. At any point in time, there is always more hunger among the poor, of course. But hunger rates are not constant; they fluctuate from one point in time to another, among both poor and nonpoor.

Why is it that hunger and poverty fluctuate over time, oftentimes upward? Why do they not drop steadily, more or less, given the various antipoverty and antihunger programs of the government? Why does the vaunted rapid economic growth not trickle down to the poor and hungry? These questions are obviously important for researchers to tackle.

One thing is definite: The GNP and its rate of growth are practically irrelevant as determinants of the levels of poverty and hunger. More crucial are the cost of living and the capability of the lower classes, through decent employment and wages, of purchasing their basic necessities.

Last Thursday, the statistician/economist Dennis Mapa wrote me this note, which I quote with his permission: “I read the SWS report about the self-rated hunger for the 3rd quarter 2014 and the result is still consistently predicted by our self-rated hunger econometric model. The culprit, based on our model, is the spike in the price of rice last quarter.”

Why doesn’t the government have its own quarterly econometric model of poverty and hunger? Do problems go away by not being observed?

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The paper “Rice, job misery, hunger incidence: an econometric analysis” by Dennis S. Mapa ([email protected]), Kristelle M. Castillo, and Krizia DR. Francisco, will be presented at the annual meeting of the Philippine Economic Society on Nov. 18, at Hotel InterContinental, Makati.

This research accepts the self-reporting approach as a valid and practical means of measuring poverty and hunger.  Using the 56 SWS quarterly surveys of 2000-2013, it identifies the price of rice and a new Job Misery Index (the sum of unemployment and underemployment rates) as key determinants of movements in hunger.  It finds that, after the global rice crisis of 2008, hunger became more sensitive to the price of rice.

Dr. Mapa is dean of the School of Statistics as well as associate professor of economics of the School of Economics of the University of the Philippines Diliman; his coauthors are BS Statistics graduates of UPD. Dean Mapa is also a Fellow of SWS.

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Contact [email protected].