Inquirer
MANILA, Philippines — Can we please try to shed more light rather than generate more heat on the very important matter of the Philippines’ poverty situation? Ever since the World Bank released its 2007 World Development Indicators, every Juan, Pepe and Kiko seems to be making assertions about what is happening to poverty in the Philippines–assertions that are unfortunately based on either outdated data or on the wrong interpretation of the data, or on no data at all! So let’s try to set the record straight.First, the data on the incidence and magnitude of Philippine poverty (incidence refers to the percentage of the population, and magnitude refers to the number of people) that started the whole brouhaha going were for the year 2000, and not anywhere near the present time. These were actually mentioned in the written news report, but they seem to have gotten overlooked by everyone who talked about them, because everyone was talking as if these referred to the here and now. Imagine arguing over seven-year-old data!
The irony of it is that the 15 million figure for the number of Filipino poor in 2000, based on the WB estimates, is actually much less than the official poverty estimates published by the National Statistical Coordination Board (NSCB). If the latter were used, the headlines would have been: “25 million Filipinos are poor,” or something to that effect. The government’s official poverty estimates are actually larger than those of the WB, and for that matter those of independent experts like Arsi Balisacan–which is a switch, because some people accuse government of fudging the data to give a rosier picture than the reality.
Which leads to a second point: the misinterpretation or misunderstanding of the data. The poverty line used by the WB is $1 a day (which it calls the international poverty line). One can easily jump to the conclusion that this is equivalent to P50 a day, using an approximation of the current nominal exchange rate. One would be wrong. The exchange rate that the WB uses is the so-called Purchasing Power Parity (PPP) exchange rate which is supposed to equalize the cost of a common basket of (tradeable) goods between countries–at 1993 prices, at that–and which is used to allow international comparisons. At the PPP exchange rate used by the WB, that $1 poverty line would be equivalent to something like P12.60 a day. Compare that to the Philippines’ official poverty line in 2000, which was P31.39 a day. Now we can begin to understand why the WB data indicate that there were 15 million poor Filipinos in 2000, while the NSCB published a figure of 25 million.
But the ones who have jumped to the wrong conclusion shouldn’t feel too bad. Because the WB itself has become careless, and does not mention, except in its endnotes, that it is talking about the PPPUS1, thus making it easy for the average reader to make the mistake.
Now to the nitty-gritty: What can be said, based on empirical rather than anecdotal evidence, about poverty in the Philippines? Let us turn to the NSCB’s Philippine Statistical Yearbook.
A very important fact, as opposed to the factoids that are foisted on us, is that both the incidence and magnitude of poverty have been decreasing, at least from 2000 to 2003: from 33 percent of the population to 30 percent of the population, and from 25.5 million people to 23.8 million people. The decreases in both incidence and magnitude are statistically significant. The decrease of 1.7 million poor people in the three-year period is noteworthy because in the same time period, our population increased by about five million.
The national average, it goes almost without saying, hides a tremendous amount of disparities, ranging from 6.9 percent (NCR) to 60 percent (ARMM) between regions, and from 5.5 percent (first district of NCR) to 70.2 percent (Masbate) between provinces. And while most regions and provinces improved, some deteriorated.
But 2003 was four years ago. Unfortunately, the results of the 2006 Family Income and Expenditures Survey, from which income distribution and poverty estimates are made, will not be out until after elections–which is a great pity. A more timely release of the data would enable the people to have solid bases for judging the performance of their political leaders.
In the meantime, is there any way of making reasonable predictions of what that survey will indicate? Well, yes. Poverty expert Balisacan has found that for every one point of per capita income growth, poverty incidence decreases by 1.5 percent; and for every percentage point decrease in the Gini ratio (a measure of inequality), poverty incidence decreases by 2.5 percent points. These elasticities, because that is what they are called, are comparable with those found for neighboring countries.
Put that to work: per capita income grew by 4.05 percent, 2.88 percent and 3.29 percent in 2004, 2005 and 2006 respectively. Assuming there was no change in income distribution during this time period, the arithmetic shows that poverty will likely have decreased from 30 percent in 2003, to 25.5 percent in 2006.
Is it reasonable to assume that income distribution will not have changed? Balisacan opines that any change will be small, because of the short time period. Moreover, the change, given the recent past, is even likely to be for the better.
This is bad news for the strident critics of the administration. Too bad for them. President Gloria Macapagal-Arroyo can be criticized for a lot of things, but let us at least give credit where it is due.
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