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Statistically Speaking
The FIES of the Rich: Truth or Consequence? 
by Dr. Romulo A. Virola 1
Secretary General, NSCB
For the Record... |
The Family Income and Expenditures Survey (FIES) is a household survey conducted by the NSO every three years. It collects data on income and
expenditures from the sampled families. The most recent FIES collected data for 2003 in two rounds – the first, in July 2003 for the first semester and the second, in January 2004 for the second semester. The NSO released the preliminary results last August 2004 and the preliminary version of the Public Use File (PUF) in February 2005. The final version of the PUF is expected to be released in December 2005.
The PUF of the FIES is a rich source of information which, unfortunately, remains underutilized by researchers and decision makers. The NSO certainly needs to undertake a more aggressive strategy to release and disseminate the FIES PUF in order to maximize the return on the investment of about PhP64 million made by the government on the FIES.
The FIES is the source of the weights used in computing the CPI. Through the FIES, we get an insight into the consumption habits of Filipino families. We get to know on what goods and services the family spends the most or the least. As mentioned in a previous Statistically Speaking article (May 2005), for example, the FIES reveals that female-headed households spend proportionately more for education than male-headed households. And since education, in the ultimate analysis, is the most important investment to put one's money on, I encourage all my friends to live by the conventional Pinoy practice and wisdom of the husband giving all his money to the wife! That way, the husband will not have enough money for him to fool around or for other women to lust after his bulges. And happily ever after, family life will be preserved and the NCRFW will have less work to do!
The FIES also provides the income data used by the NSCB in the compilation of official poverty statistics. We use it in determining poverty incidence (see Statistically Speaking , February 2005), an indicator that has been maligned all too often by many sectors of society. Unfortunately, out of ignorance, in many cases! In others, out of distrust about the validity and reliability of the NSCB estimates coming from the FIES.
But the income and expenditures data in the FIES have been provided by households – by you - rich and poor alike. If you told nothing but the truth to the NSO enumerator, you should really not worry too much about the quality of the FIES statistics that the NSO releases nor of the poverty incidence that the NSCB computes. They should be okay! But if you lied…. GIGO ! Garbage in, garbage out! And, shouldn't you lose your right to demand transparency and good governance from anyone?
We, official statisticians, cannot produce good quality statistics without your cooperation, without your willingness to tell us the truth and we do not really want you to suffer the consequence! Of course we also make computational mistakes; but the NSCB assures you, they are not intentional!
Let us now examine what you told the NSO data gatherer for the FIES!
Would you believe that the 1000 richest families had a median annual income of PhP8.44 million in 2000 and PhP14.70 million in 2003? That's about PhP703,300 per month in 2000 and PhP1,225,000 in 2003! I didn't know many of my acquaintances already counted among the richest! No wonder they sometimes had filthy habits!
And do you know how many among the richest ten percent told the NSO that they spent more than they earned? For every 100 families of them, 10 families said so in 2000 and 11 families said so in 2003! Incredible? or Ostentatious?
If these are incredible, just why do the rich lie about their income?
Income and expenditures surveys are known for possible biases arising from the underreporting or overreporting of income and expenditures. Respondents may report higher income/expenditures because they are embarrassed to 
declare their low income/expenditures or simply to impress the interviewer. At the opposite end, respondents may declare lower income because they are afraid the information may be used against them - by the government tax and other regulatory authorities or by unscrupulous individuals who may illegally get access to the NSO data. They may also underreport their expenditures because they do not want to give the impression that they are lavish spenders if they are rich, or that even if they are poor, they appreciate the virtue of saving for the future!
Isn't it strange that many of the rich work their butt off making money, only to feel shy about the income they have amassed? Doesn't make much sense, but maybe we just don't understand the ways of the rich and famous!
Nonetheless, I am sure all of you want accurate statistics from government. So come on, you guys! We, official statisticians are trying to do our share in improving the quality of statistical information we give you! How about doing yours? Tell us the truth!
But know what? The same FIES tells us that among our poorest ten percent, 38 to 40 families out of every 100 families are able to save! Coping is certainly a skill that our poor must have mastered; it is not surprising then why we score very well in the Happiness Index! And I don't think it is because the wife gets all the money of the husband! The Happiness Index has not been disaggregated by sex!
The FIES also produces the Gini coefficient which is a measure of income inequality. It takes on values between 0 and 1; the higher the Gini, the more unequal the income distribution is! For the Philippines , the Gini hovers around 0.48 (2003), compared to 0.312 (2000) in Japan, 0.362 (2000) in the U.S.A., 0.423 (1998) in Singapore, 0.433 (2000) in Thailand, and 0.343 (2002) in Indonesia . What this means is that the rich are much richer than the poor in the Philippines compared to all the countries mentioned. In fact, the income of our richest (ten percent) is twenty times the income of our poorest (ten percent)!
However, if we exclude the richest ten percent and the poorest ten percent, the Gini coefficient comes down to a more decent level of about 0.32. So that maybe, if each of our richest families numbering about 1.6 million can be conscienticized enough to sponsor the education (up to college) of at least one member of one of the 1.6 million poorest families, Philippine society will be more civil and the social volcano that some sectors are closely monitoring will remain dormant for the good of all!
In the meantime, with Christmas just around the corner, hopefully, all of us will receive bonuses of some or any form, and. the rich will splurge on many things. But please buy goods and services that help generate employment for our kababayan so that our GDP for the fourth quarter will grow faster than the 4.1% it registered in the third quarter. And when the FIES enumerator comes to your homes, please don't tell a lie?
Talking about Christmas, have you heard that we may not have three French hens on the third day of Christmas? Because of the avian flu, the French hens have to stay in France ! Well, who cares really about French hens? Don't French chicks taste better?
Maligayang Pasko sa ating lahat !
_______________
1Secretary General of the National Statistical Coordination Board (NSCB) and Chairman of the Statistical Research and Training Center (SRTC). He holds a Ph. D. in Statistics from the University of Michigan in Ann Arbor , U.S.A. and has taught mathematics and statistics at the University of the Philippines . He is also a past president of the Philippine Statistical Association.
2Source: OECD. Income Distribution and Poverty in OECD Countries in the Second Half of the 1990s. OECD Social, Employment and Migration Working Paper No. 22. (http://www.oecd.org)
3Source: Asian Development Bank (ADB). Key Indicators 2005 (http://www.adb.org/statistics)
Posted 12 December 2005.
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