Gap between rich and poor in PHL widening—report

The gap between the rich and the poor in the Philippines may have been wider in the past 25 years, according to a Washington-based think tank.

In a study, Brookings Institution’s Laurence Chandy and Brina Seidel created alternative Gini coefficients for 134 countries, including the Philippines, and saw an average of a 9-percentage-point increase in inequality worldwide.

In the Philippines the country’s Gini coefficient—a measure of inequality—shot up to as high as 0.6, or 60 percent, from the current estimate of just over 0.4, or 40 percent, when the researchers assigned it alternative Ginis.

“We interpret our revised Ginis as a plausible upper bound of the true value in each country and year,” the authors said.

“On average, our adjustment pushes the Ginis up by 9 percentage points. This raises the average within-country Gini from 39 percent to 48 percent,” they added.

A Gini coefficient ranges from 0 to 1, with 0 indicating perfect income equality among families, while a value of 1 indicates absolute income inequality.

The researchers came up with their alternative Ginis because they found that the full income of the richest citizens are not covered in surveys. This has an impact on the gap between the rich and the poor in the country.

They found that between 20 percent and 40 percent of the difference between national accounts and surveys could be explained by the missing rich.

To address the missing data of the top 1 percent, they attributed half of the missing income between surveys and national accounts to missing top incomes.

With the alternative Ginis, the researchers said five new countries joined the pool of countries with the highest inequality—Nigeria, Mexico, Indonesia, Georgia and Guatemala.

The US (0.41) and China (0.40) report very similar levels of inequality, when we adjust for missing top incomes the US appears considerably more unequal than its rival (0.51 versus 0.44)

“The possibility that inequality is, on average, much higher than reported is cause for alarm. But is inequality within the average country worsening? This is a complicated question to answer, as there are many ways to average Gini coefficients across countries,” the researchers said.

In 2015 the country’s Gini coefficient was estimated at 0.4439, or 44.39 percent.  This figure is slightly lower than the 2012 ratio of 0.4605, or 46.05 percent, which may indicate some improvement in the income distribution among families.

The PSA said the average annual family income of Filipino families was approximately P267,000 in 2015 and the average annual family expenditure for the same year was P215,000. This results in an annual savings of P52,000 in a year, on average.

Adjusting for the inflation for the two reference years using the 2006 prices, the average annual family income in 2015 would be valued at P189,000, while the average annual family expenditure would be valued at P152,000.

From 2012 to 2015, average annual family income in all deciles increased, the average ranged from P86,000 for the first income decile (lowest 10 percent) to P786,000 for the 10th income decile (highest 10 percent) in 2015.

The average annual family income of the 10th decile in 2015 was about nine times that of the first decile, while it was 10 times that of the first decile in 2012.


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