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

The poverty incidence of 30.0 percent cited in the article actually pertains to the rate of poverty among the general population for the year 2003. The NSCB has also released the data on poverty incidence among families, which was placed at 24.4 percent for the same year.
It must be noted that poverty incidence among the population decreased from 33.0 percent in 2000 to 30.0 percent in 2003, a three-percentage point decline over a three-year period that could hardly qualify as “lower[ing] poverty incidence in a flash.”
To demonstrate how this decline in poverty incidence could have come about, the per capita income distribution in 2000 and 2003, as derived from the 2000 and 2003 Family Income and Expenditure Survey (FIES)¹, respectively, are shown in the table below:

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

The P35.93 a day threshold referred to in the Daily Tribune article was for the year 2004 and was actually on a per capita or per person basis and not on a per family basis as erroneously claimed in the article. The figure was derived from the 2004 annual per capita poverty threshold of P13,113 previously released by the NSCB on 15 March 2006. Thus, for a family of five, the poverty threshold for 2004 translates to P179.63 per day.
For 2003, the annual per capita poverty threshold was estimated at P12,309, which was equivalent to P33.72 per person per day. Thus, a family of five in 2003 needed to earn a total income of at least P168.62 per day to satisfy the basic requirements of its members.

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

To say that the poverty threshold or the poverty incidence are deliberately manipulated for the Arroyo government to look good is grossly unfair to the professional men and women of the NSCB and of the Philippine Statistical System. The NSCB has constantly observed transparency in the generation of its statistics and has remained committed to the Fundamental Principles of Official Statistics adopted by the United Nations.
Prior to release, the methodology and the corresponding poverty estimates are presented to the Technical Committee on Poverty Statistics² (TC-PovStat) for validation and recommendation for approval. The TC-PovStat is the one tasked with the formulation and improvement of the poverty estimation methodology, while computation of the estimates is the responsibility of the NSCB Technical Staff. This is pursuant to Executive Order No. 352 entitled “Designation of Statistical Activities that will Generate Critical Data for Decision-making of the Government and the Private Sector,” dated 1 July 1996. The Committee consists 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.
The TC-PovStat then, thru its Chair³, presents the estimates to the NSCB Executive Board for final approval of the methodology (in case changes or improvements are made) and release of the statistics. The NSCB Executive Board formulates policies on all matters relating to government statistical operations and is composed of the Director General of NEDA as Chair, the DBM Undersecretary for Planning as Vice Chair, and as members, the Undersecretaries of the different departments, the Deputy Governor of the Bangko Sentral ng Pilipinas (BSP), the Secretary General of the NSCB, the Administrator of the National Statistics Office (NSO), Executive Director of the Statistical Research and Training Center (SRTC), the Mayor of Marikina City who is also the Deputy Secretary General of the League of Cities , and the President of the Trade Union Congress of the Philippines (TUCP) as private sector representative .
Also in the interest of transparency, the official poverty estimation methodology has been presented in several consultative workshops and dissemination forums with various stakeholders, including media people. The technical notes on the computation are likewise easily accessible thru the NSCB website. Anybody can also purchase the public use file (PUF) of the FIES from the NSO and compute the poverty incidence himself/herself.

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