This article seeks to clarify some of the points and misconceptions mentioned in the press statement of the Civil Society Organizations at the National Consultation
on the Philippines Mid-term Progress Report on the MDGs
convened by Social Watch Philippines on 15 August 2007 concerning the estimation of official poverty thresholds in the country.
1. Social Watch statement:
“Poverty statistics are doubtful because of the underestimated poverty thresholds…”
- The official poverty threshold is expressed as the sum of food threshold and non-food threshold. The food threshold refers to the minimum cost of the food items that satisfy nutritional requirements for economically necessary and socially desirable physical activities. On the other hand, the non-food threshold is indirectly computed. The expenditure pattern of households within the 10-percentile band around the food threshold (FE/TBE) is used to derive the poverty threshold. Hence in the Philippine official methodology, poverty line may be viewed as the minimum income required to meet the basic food requirements and other non-food basic needs. A more detailed discussion on the official poverty estimation methodology is available on the Frequently Asked Questions (FAQs) on the Official Poverty Statistics of the Philippines (http://www.nscb.gov.ph/poverty/FAQs/default.asp)
- In line with the efforts to increase the appreciation of its stakeholders, users as well as the media community on poverty measurement, conduct of visualization/validation exercises on the menus are highly encouraged.
- Recently, GMA News, through Ms. Kara David, personally conducted a visualization exercise and validated the 2006 revised food thresholds for the National Capital Region (NCR). The 2006 NCR food threshold was translated to a daily amount needed by a 5-member family living in NCR and the said amount was tested whether this could actually buy the food items identified in the menu and can be satisfactorily consumed by a representative family. The result of the exercise showed that the threshold passed the test and the news clip could be accessed at: http://www.gmanews.tv/video/8737/NSCB-Pinoy-family-can-eat-enough-on-P4000-monthly.
- While the thresholds passed the initial visualization tests also conducted by the NSCB Technical Staff, the NSCB intends to replicate the same exercise to be participated in by a sampled household. This will be done in collaboration with the Technical Committee on Poverty Statistics (TC PovStat)1. Results will be disseminated to the users and stakeholders of the country’s poverty statistics. This is part of the NSCB’s continuing efforts to enhance the transparency in the compilation and improvement of the quality of official poverty statistics in the Philippines.
2. Social Watch statement:
“…lack of comparability and inconsistency of estimates because of changes in methodology in 1992 and 2003, and exclusion of families without "official and permanent residence," i.e. ambulant poor who live under bridges, road islands, and along the streets.. Furthermore, declines in poverty incidence are negated by high population growth rates.”
- Based on Executive Order No. 232 on the System of Designated Statistics (http://www.nscb.gov.ph/pss/desig_eo.asp), the NSCB is mandated to generate the official poverty statistics for the country. For this purpose, the NSCB initially used a menu-based methodology following the basic needs approach to come up with national and regional poverty estimates with urban and rural disaggregation.
- Since the release of the first set of official poverty statistics for 1985, the official poverty estimation methodology has so far undergone two major revisions. The first was in 1992 when the NSCB adopted a revised methodology as a result of the efforts of the Philippine Statistical System (PSS) to improve the measurement of poverty in the country. The main difference between the 1985 and the 1992 methodologies was on the non-food component of the poverty threshold. Under the 1992 methodology, non-food items previously included in the estimation of the threshold, but were later found to be non-basic, were excluded from the computation. These include alcoholic beverages, tobacco, recreation, durable furniture and equipment, and miscellaneous expenditures. The 1992 methodology was used to produce back estimates for 1985 and 1988, and to generate poverty statistics for 1991, 1994, and 1997.
- The second major revision was in 2003 when the use of provincial prices was introduced to allow for the estimation of provincial poverty statistics. This new methodology, which adopted the old region-based menus but costed out using provincial prices, was approved by the NSCB Executive Board through NSCB Resolution No. 1, Series of 2003 (http://www.nscb.gov.ph/resolutions/2003/1.asp) issued on 15 January 2003. The NSCB used this methodology to come up with the first set of official provincial poverty estimates covering the years 1997 and 2000, and subsequently, for the 2003 preliminary and final poverty estimates, which were released on 24 January 2005 and on 6 June 2006, respectively.
- While the 2003 basic methodology has been maintained, refinements in estimation procedures are introduced whenever necessary in order to improve the accuracy and reliability of the official poverty statistics being released by the NSCB and in response to improvement activities being done by the PSS. Following the usual practice for the revision of statistics, proposed refinements are rigorously discussed in a series of meetings of the NSCB TC PovStat and in users and producers’ forums, and are presented to the NSCB Executive Board for approval.
- The refinements adopted for the 2003 final poverty estimates and back estimates for 2000 were approved through NSCB Resolutions No. 05-2005 (http://www.nscb.gov.ph/resolutions/2005/5.asp) and 11-2006 (http://www.nscb. gov.ph/resolutions/2006/11.asp). The results of the computational exercises conducted by the NSCB Technical Staff concerning these refinements, as presented to the TC-PovStat on 5 May 2005 and to the Board on 22 May, indicated that they had minimal effects on the poverty incidence estimates.
- Thus, the 3.0 percentage point reduction in poverty from the year 2000 to 2003 could not be attributed to the refinements on the poverty estimation procedures. Rather, this was actually due to the faster increase in the average per capita income of families in the lower income deciles relative to the poverty threshold. A table illustrating in more detail the changes in the per capita income distribution by income decile in 2000 and 2003, as derived from the 2000 and 2003 Family Income and Expenditure Survey (FIES) has been provided by the NSCB in an earlier “For the Record” article in response to a related issue raised by the Daily Tribune (http://www.nscb.gov.ph/announce/ForTheRecord/22June2006_2003poverty.asp).
- On the issue of excluding families without official and permanent residence (i.e. ambulant poor who live under bridges, road islands, and along the streets) in official poverty estimation, the following points are to be taken into consideration. The sampled population of the FIES may not adequately include families without official and permanent residence for a number of instances due to some operational difficulties. Also, residents of slums and squatter areas are likely to be underrepresented in the survey. It is usually difficult to include this particular type of households in the sampling frame without entailing considerable monetary and non-monetary cost. However, the likelihood of having these families in the sample is not nil as they are covered by census; the latter being the primary reference when constructing FIES sampling frame.
- At present, improvement of the existing methodology is continuously undertaken by the NSCB Technical Staff. The use of provincial menus in the computation of food and poverty thresholds is presently re-evaluated – in the sense that it is based on the same nutritional requirement / standard, the use of different menus across different provinces is comparable across space.
- The NSCB would like to thank the Social Watch for its interest in our statistics. For inquiries, please contact Ms. Jessamyn O. Encarnacion or Mr. Arturo M. Martinez, Jr. of the NSCB Social Sectors B Division at telephone numbered (632) 890-5390 or at e-mail addresses firstname.lastname@example.org or email@example.com
1 Per Executive Order No. 352, the TC PovStat is responsible for the development of the official poverty estimation methodology. This is a multi-sectoral representation consisting of noted experts in the area of poverty statistics coming from the academe, producers and users of poverty statistics from both government and non-government organizations
posted 24 August 2007.