For the Record 

On the 2003 final poverty statistics

This article seeks to clarify some of the points and misconceptions mentioned in the editorial of the 9 June 2006 issue of the Daily Tribune , entitled “Dreamlike state” (http://www.tribune.net.ph) concerning the 2003 final poverty estimates recently released by NSCB.

Daily Tribune statement

“The government's National Statistical Coordination Board (NSCB) released data the other day showing the poverty incidence in the country at only 30 percent. In a flash, the incidence of poverty was lowered.”

NSCB clarification

Per Capita Income Decile 2000 2003 % Change
Mean average per capita income      
      All income groups 28,356 30,703 8.3
      By decile      
         First decile 5,037 5,530 9.8
         Second decile 7,497 8,512 13.5
         Third decile 9,677 11,063 14.3
         Fourth decile 12,190 13,869 13.8
         Fifth decile 15,232 17,250 13.2
         Sixth decile 19,072 21,579 13.1
         Seventh decile 24,425 27,481 12.5
         Eighth decile 32,316 35,784 10.7
         Ninth decile 46,013 50,316 9.4
         Tenth decile 112,085 115,624 3.2
       
Poverty incidence 33.0 30.0 (3.0)
Per capita poverty threshold 11,458 12,309 7.4

The above data shows that poverty incidence decreased in 2003 mainly because the average per capita income of families in the lower income deciles grew faster than the poverty threshold, which recorded a growth rate of only 7.4 percent. This indicates that on the average, the increase in per capita income was more than sufficient to match the increase in the cost of basic food and non-food requirements. Moreover, the average per capita income of the three lowest income groups, where the country's poor belongs, rose at a higher rate than the poverty threshold. This means that poor families were able to cope better despite the increase in the cost of basic necessities, thereby improving their living conditions. Thus, the 3.0 percentage point reduction in national poverty incidence among population from 2000 to 2003 is plausible.

 

Daily Tribune statement

“To do this, the NSCB has placed the poverty threshold at an unrealistic P35.93 a day, meaning, to government and the NSCB, a family lives for a day on that amount.”

NSCB clarification

 

Daily Tribune statement

“This amount is utterly absurd and deliberately manipulated for the Arroyo government to look good by coming up with a lower population of the poor and the impoverished.”

NSCB clarification

 

A brief on the official poverty estimation methodology

The official poverty estimation methodology uses a quantitative, not subjective, approach to poverty assessment. As mentioned earlier, the basic source of income and expenditure data is the FIES, a triennial survey conducted by the National Statistics Office (NSO).

The methodology starts with the computation of the food threshold, which refers to the minimum cost of the food items that satisfy nutritional requirements for economically necessary and socially desirable physical activities. The nutritional requirements are determined by the Food and Nutrition Research Institute (FNRI). Currently, these are based on 100% adequacy for the recommended dietary allowance (RDA) for protein and energy equivalent to an average of 2,000 kilocalories per capita, and 80% adequacy for the other nutrients. These nutritional requirements found in the 1989 RDA4 for Filipinos for Energy and Specific Nutrients were computed by the FNRI based on the age and sex population structure of each region using the results of the 1995 Census of Population. The food threshold is also sometimes referred to as the subsistence threshold or the food poverty line .

The provincial food thresholds are determined by using regional menus and provincial prices in accordance with NSCB Resolution No. 1, Series of 2003. The menu is used as an artifice to derive the cost of the nutritional requirements. It makes it easier to appreciate the fact that the “food bundle” that satisfies the nutritional requirements is in fact, palatable to and/or fit for consumption by human beings. Food items in the menu were chosen to satisfy criteria such as cheap, locally available, and if possible, typical of the local eating practices.

To derive the poverty threshold, the expenditure pattern of households within the 10-percentile band around the food threshold is used. The guiding principles are that the nonfood components are considered as basic requirements and that expenditures on these basic nonfood requirements reflect the consumption patterns of those close to the food threshold.

For further enlightenment, the editorial staff of the Daily Tribune is likewise referred to a previous article written by Dr. Romulo A. Virola, the NSCB Secretary General, in the Statistically Speaking section of the NSCB website entitled "Poverty Statistics 2000-2003: Has Economic Growth Been Pro-Poor?" posted on 14 February 2005 after the release of the 2003 preliminary poverty estimates in January 2005 and the poverty page of the NSCB website containing details on the poverty estimation methodology.

The NSCB would like to thank the Daily Tribune for its interest in our statistics and for its contribution in the dissemination of official statistics.

Tables and notes on the computation of poverty statistics are posted in the NSCB website. For further inquiries, please contact Ms. Didi M. Ignacio, Ms. Glennie Amoranto, or Ms. Bernadette Balamban at telephone numbered (632) 896-5390 or through e-mail addresses rm.ignacio@nscb.gov.ph, gv.amoranto@nscb.gov.ph, and bb.balamban@nscb.gov.ph.

 

_______________________________

1The FIES is the basic source of income and expenditure data used for poverty estimation. It is conducted by the National Statistics Office every three years.

2Executive Order No. 352 designated the formulation of the poverty estimation methodology to the Technical Working Group on Income Statistics, which became the Technical Working Group on Income and Poverty Statistics (TWG-IPS) under the Interagency Committee on Labor, Income, and Productivity Statistics. Later, thru NSCB Memorandum Order No. 008, Series of 2003, the TWG-IPS was elevated to a Technical Committee in view of the importance of poverty statistics. Thus, the current Technical Committee on Poverty Statistics (TC-PovStat) was created.

3The TC-PovStat is currently chaired by Dr. Celia Reyes of the Philippine Institute for Development Studies (PIDS).

4The present methodology uses the 1989 RDA on the regional menus since the revised recommendation on nutritional requirements, namely, the 2002 recommended energy and nutrient intake (RENI), has only recently been released. The NSCB, however, is implementing a project on the Improvement of the Provincial Poverty Estimation Methodology which aims to come up with provincial menus that are already based on the 2002 RENI.

 

Posted 22 June 2006

 

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