NUMBERS, like those in a relationship, are often misunderstood. So much so if the numbers are being related to each other and to abstract concepts like hunger and poverty.
That’s what the Philippine Statistics Authority (PSA) recently discovered after releasing poverty figures. Critics said the poverty threshold in the first semester of last year was “too low” and was not enough to meet the basic food and nonfood needs of Filipinos.
Based on the results of the Family Income and Expenditure Survey (FIES), the PSA said the poverty threshold per family amounted to P10,481 a month. An income below this amount would categorize a family as being poor and an income above this would mean a family is nonpoor.
The PSA defines the poor based on Section 3 of Republic Act 8425 of 1997 or the Social Reform & Poverty Alleviation Act. The agency follows the National Economic and Development Authority (Neda) definition of the poor as individuals and families whose income falls below the poverty threshold or those who “cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing and other essential amenities of life.”
“The P10,481 is the minimum income needed to buy or needed to pay for the basic food and non-basic food needs of a family of five in a month, in a month. [If a family’s income falls] below that, that is what we are saying that a family is poor,” PSA Assistant Secretary Josie B. Perez explained to reporters during a briefing on poverty. “But we are not saying that just because you have P10,000, you are not poor.”
Critics confused
Philippine Institute for Development Studies (PIDS) Senior Research Fellow Jose Ramon Albert told the BusinessMirror that those who are complaining about the poverty threshold being low are “confusing their needs and aspirations with poverty.”
Albert said the Philippines, like all countries worldwide, works with a basic needs framework when it comes to computing poverty. He said the Philippines’ methodology is similar to that of Thailand, Bhutan, Malawi, Afghanistan, Laos and Lebanon, among others.
He added in a social-media post that the P10,481 was even higher than “the $1.9 per person per day international poverty line in purchasing power parity 2011 prices.” As a result, he said, the World Bank, which uses the $1.9 per day, has a lower estimate of poverty for the Philippines.
Further, he said the Food and Nutrition Research Institute (FNRI) recommends 2,000 calories of food intake daily, which is already “generous” considering that many Filipinos eat less. Albert said the rich only eat 1,900 calories per day.
What can be done is to re-examine the country’s food bundles every few years but chances are, the food bundles for the poor do not change as much, Albert said. Only the food bundles of the middle-income and high-income households change rapidly because they have more resources, he added.
Absolute line
ACCORDING to Albert, the same metric is applied in identifying the absolute poverty line.
“That’s what an absolute poverty line is—the same metric—so we know if the proportion is going down, [going] up or staying the same. The message is, with those poverty lines, 20 percent are in poverty and we must do all our efforts to bring that down to zero. Even if we increase the current thresholds to 10 or 20 percent more, or even 100 percent more, incidence will still fall but not by same amount,” Albert said. “What we should be working for is reducing the 20 percent in poverty to zero. We should work for a country where no one is poor.”
On social media, former National Anti-Poverty Commission Undersecretary Jude Esguerra said that while Perez “was firm in her defense” of the threshold, she did fail to explain that it was important to count the number of Filipinos who are just above the poverty line and how their situation changed between 2015 and 2018.
“A society can choose several poverty lines, including one, for example, that provides a buffer for the effects of a mild El Niño, but the trends in poverty reduction are very often robust even when a higher poverty line is chosen—and what is important is whether the number of families crossing the chosen thresholds is either falling short or exceeding what we aimed for,” Esguerra added.
Intelligent computation
THE PSA said poverty line or poverty threshold refers to “the minimum income/expenditure required to meet the basic food and non-food requirements.” Filomeno S. Sta. Ana III of the Action for Economic Reform (AER) said this is not a simple number since it is backed by a “scientific method.”
Changing the method of computing the data is also expensive, according to Sta. Ana, coordinator of the nonprofit AER. Given the situation, it would be better for the government to focus on its programs and projects than to tinker with the method of computing the poverty threshold.
In the past few days, many critics said the P10,481 is not a “decent” amount to live on. But the PSA pointed out the word “decent” is subjective and cannot be used in computing exact numbers.
“Calculating the threshold has a scientific method. We cannot determine the threshold based on subjective preferences,” Sta. Ana said. “Threshold means the minimum necessary for a person to fulfill basic needs. That is the priority. Having a higher income target has consequences on interventions including budget. So the threshold is a guide for development planning.”
Former National Statistical Coordination Board (NSCB) Secretary General Romulo A. Virola told the BusinessMirror the poverty threshold is also based on the income and expenditures derived from the FIES.
One’s impossible
THE FIES in 2018 was conducted using the 2013 Master Sample with 180,000 sample families. It is considered the largest of the FIES conducted in recent years.
Conducting the FIES is no simple task. Apart from conducting face-to-face interviews, the questionnaire takes three to five hours to administer, depending on the size of the household.
The questionnaire includes income sources in cash and in kind as well as expenses. Households need to estimate the amount of rice, for example, that they consumed during a certain period, usually a week or a month. Since the questionnaire includes data on “in kind” or donations from all kinds of food and non-food items, households are also required to provide this information.
“For poverty monitoring, you want to know the income one should have to be able to pay for the basic requirements to ‘live’ so the cheapest menu is what you are after,” Virola said. “Most of those who cannot understand the threshold think in terms of eating in restaurants, enjoying alcoholic drinks and cigarettes, expenditure items that are not basic.”
He further explained that the “fe” (food expenditure) over “tbe” (total basic expenditure) “is derived from the FIES—the expenditure patterns and the income.
Virola added that if there is something that can be improved on, it is for the PSA to widen its coverage of places to obtain prices—this, in order to improve the computation of prices in the menus or food bundles.
He said it would also be good to reconsider the position of National Statistician being given to only one person. Virola said it is impossible for just one National Statistician to address all these concerns.
Ratio, requirements
CURRENTLY, the government has two measures to determine how many Filipinos remain poor. The first measure is based on the FIES while the other, which is the most recent one that was developed by the PSA, is the Multidimensional Poverty Index (MPI).
The poverty data computes for the threshold and from there determines how many households meet this income level. This can be done since the FIES collects both income and expenditure per household.
The mathematics behind the threshold involves dividing what is termed as the food threshold with the ratio of the food expenditures and total basic expenditures. The food expenditures and basic expenditures are based on the FIES.
The food threshold only accounts for food requirements. This is based on the national reference food bundle, which is converted into provincial food bundles. These include food items that are: least costly; nutritionally adequate or meets the 100-percent Recommended Energy and Nutrient Intakes (Reni) for energy and protein and 80-percent Reni for other vitamins and minerals (such as those contained in fruits and vegetables); locally available; and can be cooked together and be fit for human consumption.
Difficult determination
IN a presentation at the First Data Festival last year, PSA Poverty and Human Development Statistics Division Chief Statistical Specialist Bernadette B. Balamban said the national reference food bundle for breakfast includes the following: scrambled egg, coffee with milk, and boiled rice/rice-corn mix. Balamban said lunch includes boiled/ginataang (coconut milk) monggo with malunggay (Moringa oleifera) and dried dilis (Philippine anchovy), banana, boiled rice/corn mix.
She said dinner had fried fish/boiled pork, vegetable dish, boiled rice/rice-corn mix; and for snacks, bread or boiled rootcrop.
Translated into the food bundle for the National Capital Region (NCR) or Metro Manila, breakfast includes scrambled egg, coffee with milk, and boiled rice; lunch is boiled monggo with malunggay and dried dilis, latundan and boiled rice; and, dinner is fried tulingan, boiled kangkong and boiled rice; and for snacks, pandesal.
“To estimate the food threshold, each of the ingredients in the food bundle [is] priced using data collected by PSA,” Balamban said in her presentation. “The per capita per day food cost are then computed based on this, which is then multiplied by 30.4 (approximate number of days per month) to get the monthly food threshold or by 365 days (30.4 days/month x 12 months) to get the annual per capita food threshold.”
The food bundles all come from the FNRI since these are based on Reni, as well as the proportion of food bought and own-produced components obtained from the Food Consumption Survey.
But prices of food items are obtained from the PSA’s agricultural commodities retail and farm gate price data, by province and non-agricultural commodities retail price data, by province.
In terms of nonfood items, Balamban said these included clothing and footwear; fuel, light and water; housing maintenance and other minor repairs; rental of occupied dwelling units; medical care; education; transportation and communication; non-durable furnishing; household operations and personal care and effects.
“As common practice in most countries, the nonfood component is measured indirectly, due to the difficulty of determining the required bundle for the nonfood items,” the PSA said in a briefer on the poverty methodology released on Friday.
Ibon, BMP
FOR Ibon Foundation Inc., choosing poverty lines was a political decision since setting a high standard indicates that the government will have a high level of ambition for poverty eradication.
For the nonprofit group, the family living wage (FLW) for a family of five members in NCR is more than double the government-set poverty threshold. Ibon estimated that each family must have P23,660 per month or P1,004 per day to be able to meet their food and nonfood needs.
“Government, however has chosen to set a low standard—in this case, the P10,481 per month or P69.87 per day poverty threshold—which results in tens of millions of Filipinos not meeting minimum standards of well-being and hidden behind unrealistic official poverty statistics,” Ibon said.
Meanwhile, Leody de Guzman, the chairman of the militant Bukluran ng Manggagawang Pilipino (BMP), said the PSA should “abandon its existing poverty threshold” and “take the cue from the public’s rejection of their recent statistics.”
De Guzman also challenged members of the economic team to “try to live [on a] P10,000 a month budget,” since it is the “best way” to appreciate the sentiments of the people on their poverty.
He added that the “public’s rejection” of the latest poverty statistics is a “clear signal” that the PSA must adopt a new poverty measure.
Netizens’ ire
A GOOD place to start, de Guzman said, is the earlier statement of Socioeconomic Planning Secretary Ernesto M. Pernia on the decent or living wage that is P42,000 a month for a family of five.
“The principal measure for poverty should be the cost of decent living. The minimum wage for eight hours of work should be equal to the cost of living,” de Guzman said. “Anything below it is starvation wages and indecent.”
Meanwhile, Abakada Party List has also called on the PSA to release “realistic figures to justify their poverty threshold in order to provide the proper benchmark to address the problem.”
Abakada Party-list Rep. Jonathan dela Cruz said the P10,481 poverty threshold set by the PSA was not consistent with actual experiences, based on their own consultations with different sectors.
If the data was credible, dela Cruz added, the PSA would not come under fire from netizens who feel like the data was plucked out of thin air. He urged the PSA to furnish the details of their computations and explain how the agency arrived with the threshold.
“The work of the PSA is to provide statistics that will serve as a basis for legislators and budget agencies to create legislation and projects that will benefit the masses,” dela Cruz said. “In order to promote their credibility as an agency, they must convince the people that they know what they are doing. These initial figures are doing the opposite.”
APIS, LFS
NEDA Undersecretary for Policy and Planning Rosemarie G. Edillon said the official poverty statistics, which are based on incomes, is an international standard that is the basis for many of the country’s goals and targets, including international commitments such as the Sustainable Development Goals (SDGs).
However, Edillon said the government has another way to measure poverty that focuses on other issues apart from income. The MPI, which was only introduced in 2018, measured “deprivations in various dimensions.” The PSA said this was created in response to studies that showed poverty was not only about income.
No less than Nobel laureate in economics Joseph E. Stiglitz, in a piece titled “Beyond GDP” for the website Project Syndicate posted on December 3, 2018, highlighted the need to examine other factors affecting well-being beyond income.
Stiglitz said GDP was not a good measure for well-being since it was a measure of production and that it highlights materialism. “If we want to put people first, we have to know what matters to them, what improves their well-being, and how we can supply more of whatever that is,” he said.
Based on the technical notes of the initial data released by PSA, the MPI methodology, developed by PSA in consultation with the Interagency Committee on Poverty Statistics (lAC PovStat), used the merged dataset of the 2016 and 2017 Annual Poverty Indicators Survey (APIS) and Labor Force Survey (LFS).
It measured deprivations in four key dimensions—education; health and nutrition; housing, water and sanitation; and employment. These were measured according to 13 indicators, the most was in housing, water and sanitation which had five indicators—assets, toilet, water, tenure, housing materials and electricity.
Education indicators included school attendance and educational attainment; for health and nutrition, the indicators are hunger, food consumption and health insurance; and for employment, underemployment and working children who are not in school.
The merged datasets have 5,324 families for 2016 and 4,202 for 2017. As a result of the merging of the two datasets, weights were adjusted correspondingly with employment and education getting the largest weights.
“This is a measure that focuses on the deprivation of the comforts in life,” Edillon said.
Recalculating index
HOWEVER, the MPI had its own challenges. In a study titled “Poverty is Multidimensional: But Do We Really Need a Multidimensional Poverty Index?,” Albert and Research Assistant Jana Flor V. Vizmanos said some indicators such as the experience of hunger and non-coverage of health insurance to determine extent of poverty in the country may be included.
However, Albert and Vizmanos said coming up with an MPI would be better left to think tanks and other research institutions to avoid any confusion when it comes to official poverty estimates that are periodically released by the PSA.
De Guzman also said that the MPI released last December 2018 was still insufficient since it would be better for the dimensions to be identified by Filipinos and not PSA.
The labor leader champions a “participatory multidimensional poverty index” which first asks people the indicators they feel as most important to their poverty and how important those indicators were before preparing a formula for MPI.
De Guzman said their own study reveals there’s a problem in selecting the components of MPI and its threshold. He added these components are limited and the threshold is unbelievable.
“Our team studied this and discovered there’s a problem in selecting the MPI components and their thresholds—the components are too limited and the thresholds seem unrealistic,” he said in a mix of English and Filipino.
De Guzman champions a “participatory MPI,” which first asks poor people what factors affect their level of poverty and how important these are to their life. This must be done before preparing a formula for MPI.
He also suggested that the government use a figure that would indicate “decent living.” De Guzman said a good number to start with is the number P42,000 a month put forth by Pernia himself. He said this amount should be used to measure poverty.
“The minimum wage for 8 hours of work should be equal to the cost of living,” he said. “Anything below it is starvation wages and indecent.”
Integrity of data
For the uninitiated, changing poverty thresholds and methodologies are simple, mundane tasks. But in truth, Edillon said, it is not. Given the standards that need to be followed to ensure the integrity of the data that is collected, there is no room for the government to cut corners.
Edillon said that while the government understands the limitations of the data it has on poverty, the PSA has not been remiss in its duties to improve them. She said, however, there are “best practices” that need to be followed, such as not changing methodologies within an administration. She said this is similar to changing “the rules of the game” while the game is ongoing.
An example would be the poverty methodology of the PSA. Edillon said based on a resolution released by the defunct NSCB, the poverty methodology can only be changed every 12 years. However, given that the last update of the methodology was in 2009, the methodology needs to be changed by 2021. But, she said, since this change will happen within the same administration, it cannot be done and the updating will have to be done in 2023 or when the new administration arrives.
“We share the same frustration over that measure, that’s why we are developing other measures such as the multidimensional poverty index, which is based on the APIS, and one new measure that we are trying to develop is the AmBisyon, but it will not come up with a peso number, it will be more self-rated,” Edillon said.
The poverty indicators to be included in the AmBisyon measure will be based on the goals and aspirations of Filipinos as stated in the AmBisyon2040. There are three pillars, the Matatag, Maginhawa, and Panatag na Buhay, which will be the basis for the indicators.
Other variables
BASED on the results of the long-term vision, AmBisyon2040, data showed that 79.2 percent of Filipinos only want a simple and comfortable life in 25 years. Only 3.9 percent of Filipinos wanted to have the life of the rich.
Sample indicators under Matatag include asking Filipinos if they are able to spend enough time with family and friends, while those under Maginhawa can include the hunger incidence, diet diversity and going on vacations, among others. Indicators under Panatag include those that pertain to security and safety, including savings.
“This will give the percentage of those who consider that they are enjoying the matatag, maginhawa and panatag [stable, comfortable and secure] life that they want,” Edillon said. “Yes, this can answer question on the ‘decent’ debate when it comes to the FIES-based poverty incidence because based on the 2016 survey, this [AmBisyon] is the life we want.”
Edillon said the Neda has already done the pretest for the AmBisyon measure. The pilot study has already been conducted nationwide but only had 5,000 respondents. She said it was an exercise intended to pilot the questionnaire so the numbers obtained from the survey were not definitive.
She hopes that with the approval and signing of the 2019 budget on Monday, the government can conduct the nationwide baseline survey for the AmBisyon within the year. The Neda will be bidding out the project to a third party, more likely a research institution, to conduct the survey.
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