The Self-Rated Poverty Gap
In the official poverty statistics, the poor are defined as those with income below the official poverty line. For the poor, the difference between their actual income and the poverty line is called the poverty gap.
To identify poor families, the government needs to survey family incomes, for comparison with its official poverty line. Such a survey is very lengthy, and has no more room for other topics besides income.
To measure Self-Rated Poverty (SRP), Social Weather Stations does not need to design a poverty line. Neither does it need to know the family income. It shows the respondent a card stating “Mahirap” on one end, “Hindi mahirap” on the other end, and a line in between; then it asks the respondent where his/her family belongs on the card. This separates the respondents into the self-rated poor, the self-rated nonpoor, and the borderline.
Next, SWS asks anyone who rated the family as poor how much it needs for home expenses in order not to be poor. The answer is the Self-Rated Poverty Threshold (SRPT). The median of the SRPTs is what the poorer half of the poor need for home expenses.
SWS has done national surveys on SRP and SRPT from 1983 to the present. In 1986-91, the surveys were semiannual. Since 1992, the SWS poverty surveys have been quarterly. This is the world’s most rapid survey-based system of tracking poverty (see “The value of Self-Rated Poverty,” Opinion, 1/9/16).
In December 2016, the SRP rate was 44 percent for the Philippines, with a median monthly SRPT of P10,000 per family. It is much larger than the official poverty rate—16.5 percent of families as of 2015—because the real needs of the people are much higher than supposed by the official poverty line (see “Unrealistic official poverty,” 11/12/16).
By area, the SRP percentage was 31 in the National Capital Region, 42 in the rest of Luzon, 56 in the Visayas, and 47 in Mindanao. The median monthly SRPT was P18,000 in NCR, and P10,000 in the other three major areas; these are modest, realistic thresholds.
The higher the education, the less the poverty. The December 2016 poverty percentage was 62 in families headed by elementary dropouts, 50 in families headed by high school dropouts, 37 in families headed by college dropouts, and only 27 in families headed by college graduates.
Higher education is associated with higher standards for home spending. The median SRPTs of these education groups were P7,000, P10,000, P12,000, and P20,000, respectively, per month.
In 2016, SWS asked its self-rated poor respondents how much they lack in home expenses relative to their stated threshold. The answer is the Self-Rated Poverty Gap (SRPG).
In December 2016, the median SRPG for the Philippines was P5,000 per family per month. It was P8,000 in NCR, P5,000 in both the rest of Luzon and the Visayas, and P4,000 in Mindanao. These are very large gaps. The poor are not just slightly below their own thresholds.
For the four education groups, from lowest to highest, the median monthly SRPGs were P3,000, P5,000, P5,000, and P8,000. The higher the education, the higher the poverty gap.
Subtracting these from their respective SRPTs results in estimated monthly family incomes of P4,000 for poor elementary dropouts, P5,000 for poor high school dropouts, P7,000 for poor college dropouts, and P12,000 for poor college graduates. Thus, the Self-Rated Poverty Gaps, together with the Self-Rated Poverty Thresholds, enable indirect estimation of the incomes of the poor.
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