Unrealistic official poverty

Accuracy in measuring the change in poverty over time and measuring the scale of poverty at a point in time are two different things.

Last week, in “The poverty drop was anticipated” (11/5/16), I said that, long before the Philippine Statistics Authority’s new official poverty report (10/27/16), the SWS poverty report for the final quarter of 2015 (1/6/16) already showed a lower incidence of poverty in 2015 than in 2012.

Last January’s SWS report also had data for 2013 and 2014, on which the PSA is silent. The PSA is reluctant to integrate the Annual Poverty Indicators Surveys (Apis) of those two years with the triennial Family Income and Expenditure Surveys.

As of now, SWS poverty data are already published for the first three quarters of 2016.  Whereas, at last Tuesday’s annual conference of the Philippine Economic Society, high officials of the National Economic and Development Authority told me they did not know whether the PSA (which is under the Neda) did an Apis in 2016.

Aside from being reported more quickly, the SWS poverty incidence rates are larger, and more realistic, than the official ones. In the Philippines, self-rated poverty among families was 42 percent in 2016Q3, compared to a 50-percent average in 2015. These magnitudes are realistic because they are sourced directly from household heads, using their sense of their own poverty.

On the other hand, the PSA poverty incidence for 2015 is only 16.5 percent of families.  (Since the government’s data are about the income and expenditures of families, rather than of individuals, there is little value in its estimates of the poverty of the population.) This is unrealistically small because the official poverty line is very stingy.

The PSA starts its construction of the official poverty line at the individual level.  It proceeds to the family level by multiplying the individual line by an estimated number of persons per family.

It first estimates the cost of a given amount of food for a person, based on a bare nutritional standard.  Then it uses an age-old 70:30 ratio of the cost of food to the cost of nonfood needs, without actually citing minimum needs for water, clothing, housing, utilities, transportation, education, etc., as though price-changes of these nonfood items do not affect poverty.

For the Philippines in general, the 2015 official total threshold per person is P21,753 for the year, or only P59.60 per day.  This is a wishful definition.

For the National Capital Region, the official total threshold per person is P25,007 for the year, or P68.51 per day.  Multiplying that by 5 and by 30 gives a wishful line of P10,276 per family per month for the NCR.

Official poverty in the NCR became a miniscule 2.4 percent as of 2009, the first year of application of a freshly reduced official poverty line (see “The lowering of the official poverty line,” 2/12/11).  It was 2.6 percent in 2012, and 2.7 percent in 2015, pretending that metro poverty has been virtually gone for seven years already (see “Is poverty gone in NCR?”, Opinion, 2/19/11).

For comparison, self-rated poverty in the NCR averaged 33 percent in 2015, and also in the first three quarters of 2016. The median self-rated poverty threshold, or what the lower half of the poor families said they needed for home expenses in order to escape poverty, was P20,000 per month in the first two quarters this year, and P16,000 in the third quarter.  These are much more realistic than the official poverty figures.  They show that there is still so much more to do.

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