The reform of official poverty statistics
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(First published in the May 4th, 2013 issue of the Philippine Daily Inquirer)
The public release of new official statistics last April 23 was a great milestone in the monitoring of poverty in the Philippines. It was the first step into a system of officially counting the poor at least annually, rather than only once every three years.
For me, counting the poor faster is the most convincing proof that the poor really count to the administration of President Noynoy Aquino. I congratulate the new head of the National Statistical Coordination Board, Dr. Jose Ramon “Toots” Albert, who is directed by the new head of the National Economic and Development Authority, Dr. Arsenio “Arsi” Balisacan, who has the backing of Secretary Florencio “Butch” Abad of the Department of Budget and Management.
The new poverty figures, referring to the first semester of 2012, were issued 10 months afterward. They compared poverty to the first semester of 2009, since there were no income surveys in 2010 and 2011. The next official poverty figures will refer to the second semester of 2012, and will be ready six months from now.
There will be a new survey of family income in 2013—for each semester again, I hope, and not just once for the whole year—to enable official 2013 poverty statistics to be released in 2014. With annual government surveys of family income, 2014 poverty will be officially known by 2015, 2015 poverty will be officially known by 2016, and so on. Thus, the current administration will be able to track poverty under its watch at least once a year in its remaining three years.
The old system of triennial estimation of poverty had been in place since the time of Cory Aquino, and was long in need of reform. Under Marcos, there was no poverty counting at all. The poor were simply the lowest 30 percent in terms of income, by definition.
The old system would have entailed waiting for completion of two semestral surveys on family income in 2012 (so as to compile income of the whole year), and releasing of the new figures only in February 2014, 14 months afterward. It would have skipped 2013 and 2014 entirely. Its next-scheduled family income survey would be in 2015, for release of poverty figures only in February 2016, when P-Noy’s term would be almost over.
The old system led to severe complacency about poverty. Although it showed stagnation in poverty between reference years 2003 and 2006—as was discovered only in February 2008—government leaders neglected the problem since there were no statistics for the non-survey years of 2007 and 2008 to remind them of it. Between 2006 and 2009, there was again no real change in poverty—but this was only discovered in February 2011, and the stagnation could rightly be attributed to the previous administration.
The stagnation of official poverty over reference years 2009 and 2012 is fully consistent with the trend in Social Weather Stations’ quarterly tracking of poverty by the self-rating approach over that period. Averaging the four quarters of SWS surveys each year, self-rated poverty was 49 percent in 2009, 48 percent in 2010, 49 percent in 2011, and 52 percent for 2012.
The government hopes that the next official figures, for the second semester of 2012, will show some relief in poverty. I also hope so, but my confidence is weak, since self-rated poverty in 2012 was 55 percent in Q1 (quarter one), 51 percent in Q2, 49 percent in Q3, and 54 percent in Q4. Last April 24, SWS reported that self-rated poverty in the first quarter this year was 52 percent, based on the Social Weather Survey of March 19-22, 2013. That’s a bit less than in 2012Q4, but merely the same as the 2012 average.
Thus, the time-trends of self-rated poverty and official poverty are proven to be the same. It’s only their magnitudes that are different. It’s but natural that the scale of poverty is much larger when seen from bottom-up (or self-rated) than when seen from top-down (by applying an official poverty line to income).
Since the cost of living varies very much from place to place, let’s consider the National Capital Region in particular. For NCR, the National Statistical Coordination Board set P10,084 per person as the official poverty threshold for the first semester of 2012. Multiplying that by five persons, and then dividing it by six months, gives only P8,403 per month for a family of five persons to be officially classified as non-poor.
The official threshold is much less than what most poor household heads tell SWS they need for the home budget in order not to call the family poor. In NCR, the monthly poverty thresholds of self-rated poor households had medians of P12,000 in 2012Q1, P15,000 in 2012Q2, P15,000 in 2012Q3, P12,000 in 2012Q4, and P15,000 in 2013Q1. These amounts are very realistic. The median satisfies only half of the poor.
On May 30, the NSCB will issue its first estimate of Gross National Product for the first quarter of 2013. As always, this will divert public attention to economic growth. The first quarter’s growth will be known much ahead of the official 2013 poverty figure, which, alas, is due only in 2014, one year behind its reference period.
Ideally, poverty should be measured as frequently as the national income accounts, to enable the public to examine poverty and economic growth at the same time. It is why SWS tracks poverty and hunger quarterly. When the reform of official poverty statistics proceeds that far, it will be proof that the poor count just as much as the rich.