NSCB - Statistically Speaking... THE U.P. CENTENNIAL: DO U.P. GRADUATES KNOW HOW TO USE STATISTICS?

THE U.P. CENTENNIAL: DO U.P. GRADUATES KNOW HOW TO USE STATISTICS?

Dr. Cecilia Florencio, one of the University of the Philippines (U.P.) Centennial Fellows who is scheduled to deliver her lecture in June, invited me to write a paper for the U.P. Centennial book she was editing. I was supposed to write about official poverty statistics. Unfortunately, despite her very accommodating deadline extensions, I did not make it. Sorry Cecille. But this article talks partly about a couple of things I had originally wanted to communicate to U.P. graduates.

Having participated in many local and international fora with various kinds of stakeholders of statistics, I am convinced that (1) the use of statistics for the progress of society has not reached anywhere near optimum levels; (2) many national statistical systems are already producing statistics that are more than adequately useful in decision-making; (3) many demands for additional official statistics are made by stakeholders who actually do not know how to or will not use them for policy making or program intervention; (4) there are many decision makers who still do not recognize the power of statistical information; (5) there are many decision makers who do not know how to use statistics and (6) official statistics must continue to improve, especially in terms of relevance.

In the case of the Philippines, I also noticed that some practically accuse us official statisticians of cheating for leaders of our government. Much like some of us who think we are wiser, more upright and more erudite on matters of law than the justices of our Supreme Court. I am sure this happens in other countries too. But it is very unfair to the many bright and very hardworking statisticians who have decided to serve our government and our country, notwithstanding the utterly low pay in government service. Surely, we commit mistakes every now and then in our compilation of official statistics, but we in the NSCB would like to assure our stakeholders that we will always live by the Fundamental Principles of Official Statistics² and be professional in our work, as our Core Values command us to do!

Going back to the U.P. Centennial paper, I wanted to say

Statistics show that the Philippines has failed in many fronts of human pursuit and has now lagged behind our neighbors who in fact, learned many things in the past from the Philippines ( buti na lang, we still have Manny Paquiao!);
The most glaringly woeful erosion of our comparative advantage shows in education. Statistics are very clear on this³ - our human capital has devalued many times over! (so, when, oh when and how will our education pillars be able to solve this problem? If you were to ask some, their simple-minded solution would be to merge DepEd, CHED and TESDA!)
While the performance of the Philippine economy in recent years could not match those of the emerging Asian tigers like China and India and even of Vietnam, it cannot be denied that the Philippines has achieved some degree of economic progress over the years (except by the incorrigible Pinoy bashers among us who constantly blame government but never ourselves for our failures or by those who take potshots at the official statisticians when the GDP growth rate is higher than their irrational expectations!);
While economic progress was higher between 2003 and 2006 than between 2000 and 2003, poverty slightly increased between 2003 and 2006 compared to a moderate reduction between 2000 and 2003. More specifically, official statistics (Table 1 ) show that economic growth between 2003 and 2006 had benefited the rich more than the middle income and poor families. Between 2000 and 2003, the economic growth, though at a lower level, benefited the poor and the middle income more than the rich;
The economic growth between 2003 and 2006 actually benefited the so-called poorest of the poor relatively more than the rest but not enough to take them out of poverty because prices of commodities they bought increased faster than the increase in their income which remained below the poverty line. Inflation rate was higher between 2003 and 2006 than between 2000 and 2003; and
Most importantly, our obviously less than outstanding success in poverty reduction means that our decision makers including those in the private sector need to be more perceptive and honest in the design of interventions (greed has to be moderated at the very least, in case one has forgotten)

Persisting poverty, together with the current rice price crisis and the corruption, transparency and accountability issues, begs the question: what are U.P. graduates doing to help? Has the Iskolar ng Bayan been a positive and meaningful influence in our society? Or are we, U.P. graduates in fact, now a big part of the problem? We whose education had been subsidized by our taxpayers! We who had been blessed with talents that if only had been harnessed fully and judiciously could have stopped the Pinoy diaspora before it started to cost the lamentable social ills now being suffered by many families of our hardworking OFWs in distant shores. Questions on how the U.P. graduates could contribute more to nation building certainly should resonate in the hearts and minds of all U.P. alumni if the celebration of the U.P. Centennial is to have meaning!

Statistics are generated and disseminated to inform decisions. They can be used to do good; but unfortunately, they can also be used to do evil. If the failure of our society where many U.P. graduates play an important role is any indication, can we then say that either U.P. graduates do not know how to use statistics or that they use it to do evil! Of course not!. But I know many U.P. graduates who do not seem to know how to use statistics. However, even if I invoke the writ of habeas data, I do not think I can prove that U.P. graduates use statistics to do evil!

For instance, if the main target of our development agenda is to reduce poverty incidence and knowing that our resources are limited, interventions should logically be geared more towards helping those who are already living near the poverty line, rather than helping the poorest of the poor. This sounds cruel and may be socially unacceptable, but if we set our goals, we must know how best to attain them. In fact, the programs and strategies adopted and implemented between 2000 and 2003 may just have been aligned along this line. This is what our economic managers and the critics of government must focus on!

On a related matter, questions have been raised about the 7.3% economic growth last year. If the economy grew so fast, why did poverty worsen?

Firstly, the 7.3% growth was for 2007. The increase in poverty incidence occurred between 2003 and 2006, i.e. before 2007.

And secondly, as NSCB has said⁴ in the past, economic growth does not always have to translate to actual reduction in poverty. If there is economic growth but the rich gets richer or the income distribution becomes even more unequal, or prices of commodities purchased by the poor rise too fast, poverty can indeed worsen. That is why it is very important for the rich and the famous among our civil society to nurture that virtue of social responsibility that we all love to talk about!

Our former boss, Dr. Felipe M. Medalla was also quoted many times over by the media on his analysis which basically raises “inconsistencies” between the national accounts compiled by the NSCB and the FIES conducted by the NSO. Quoting Dr. Cielito F. Habito⁵ another former boss of ours, as he cited Dr. Medalla’s findings, “ …Still, trends in the PCE estimates from the GDP accounts and those from the FIES should be consistent. And in fact, they have been – until after 2001….But from 2001 onwards, PCE growth based on GDP data inexplicably got jacked up much higher than PCE growth implied by the FIES data – so the data points for 2001 onward end up in the wrong place (“outliers”) in the graph. The jump was so drastic that PCE based on GDP data grew fastest in the Arroyo years, and yet PCE from the FIES grew the slowest in that same period! Most analysts who know the data would tend to believe the FIES more. If this indicates PCE to be overstated in the GDP accounts, therein lies strong reason to suspect that GDP growth has been overstated lately. ” For sure, Dr. Medalla and Dr. Habito have been very sympathetic to statistics and the Philippine Statistical System. In fact, during Dr. Medalla’s term, he even sacrificed some funds of the NEDA Proper just so the FIES could be provided with the required budgetary allocation! And I am convinced that no way are they accusing us in the NSCB of deliberately manipulating the figures. But also, I do not understand the “inconsistencies” they are talking about. Here is why.

As we have said in the past⁶, the Philippine System of National Accounts (PSNA) statistics are not exactly the same as the FIES statistics. For instance, PCE from the PSNA is not the same as the Family/Household Expenditures from the FIES. Likewise, the Disposable Income of the Household Sector from the PSNA is not the same as the Family Income from the FIES.
If these terms are conceptually different, why should their growth rates be the same? Simple arithmetic should be able to explain why not. However, since these sets of terms are conceptually close to each other, one can expect the trends to be the same. Indeed they are, and not only before 2001, as our official statistics show.
If we look at the PSNA PCE and the FIES Total Family Expenditures at Current Prices⁷, their trends are definitely not divergent! In fact, even the PSNA compensation inflow and the total factor income inflow (compensation plus property income) and the total family expenditures (FIES) show similar trends. Note also that between 1985 and 1988, the growth rate of PCE was higher than that of Total Family Expenditures just like it was after 1997. (Table 2 and Chart 1)
Likewise with the PSNA Disposable Income and the FIES Total Family Income at Current Prices. (Table 2 and Chart 2).

There. I hope we have clarified things.

And we are grateful to our present boss, Acting Socio Economic Planning Secretary Augusto B. Santos for defending our reputation.

What all this tells us is that (1) greater advocacy for statistics is needed to reach all levels of decision-making; (2) statistical capacity building should now address the needs of data users in addition to the needs of data producers and (3) the government and the private sector must invest in statistics and appreciate the important role of statisticians and statistics in society. And to enhance the relevance of official statistics in the Philippines, the Philippine Statistical System, especially the NSO, must strive to produce critical statistics at least with provincial level of disaggregation. We must also disseminate our statistics in a more timely manner. But the LGUs must also develop the capacity and the political will to generate statistics themselves⁸.

Long live The Oblation!

Reactions and views are welcome thru email to the author at ra.virola@nscb.gov.ph

_______________
¹ Secretary 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. The author thanks Estrella V. Domingo, Raymundo J. Talento, Jessamyn O. Encarnacion, Bernadette B. Balamban, Ma. Fe M. Talento, Noel S. Nepomuceno and Candido J. Astrologo for the assistance in the preparation of the article.

² Adopted by the UN Statistical Commission in April 1994.

³ Statistics on Philippine Education: Good News and Bad News!, Statistically Speaking, January 2007, http://www.nscb.gov.ph

⁴ Official Poverty Statistics in the Philippines: Methodology and 2003 Estimates, by Romulo A. Virola, Redencion M. Ignacio, Glenita V. Amoranto & Bernadette B. Balamban,, 42nd Annual Meeting of the Philippine Economic Society, 4 March 2005, Manila and http://www.nscb.gov.ph/poverty/2003/notes/notesF.asp

⁵ No Free Lunch: Is our GDP growth overstated? Philippine Daily Inquirer, March 16, 2008.

⁶ Reconciling the Philippine System of National Accounts and the FIES, presented by the author during the 43rd Philippine Economic Society Annual Meeting, Asian Institute of Management Conference Center, Makati City.

⁷ Comparing constant price estimates will introduce a new source of difference: inflation or price change.

⁸ The NSCB has had the pleasure of working with Palawan and Guimaras on their Provincial Product Accounts.

Posted 14 April 2008.

Table 1. Economic Growth and Poverty

	2000	2003	2006	% change 2000-2003	% change 2003-2006

Poverty incidence (family)	27.5	24.4	26.9	-3.10*	2.47*
Poverty threshold (per capita annual)	11,458	12,309	15,057	7.42	22.33
Subsistence Incidence (family)	12.3	10.2	11.0	-2.11*	0.83*
Food Threshold (per capita annual)	7,707	8,149	10,025	5.73	23.02
Mean per capita income
All income groups	28,356	30,767	35,788	8.50	16.32

First Decile	5,435	6,034	7,389	11.03	22.45
Second Decile	8,276	9,492	11,263	14.70	18.65
Third Decile	10,795	12,422	14,599	15.07	17.53
Fourth Decile	13,675	15,663	18,249	14.54	16.51
Fifth Decile	17,076	19,554	22,781	14.51	16.50
Sixth Decile	21,557	24,526	28,493	13.77	16.17
Seventh Decile	27,747	31,288	36,551	12.76	16.82
Eighth Decile	36,693	40,993	48,200	11.72	17.58
Ninth Decile	52,410	58,114	69,335	10.88	19.31
Tenth Decile	127,068	133,347	151,130	4.94	13.34

	2001	2002	2003	Average 2002-2003	2004	2005	2006	Average 2003-2006

GDP Growth
At Current Prices		9.2	8.9	8.89**	12.9	11.6	10.9	11.81
At Constant Prices		4.4	4.9	4.93**	6.4	4.9	5.4	5.57

Inflation Rate (2000=100)
CPI All Item	6.8	3.0	3.5	4.42	6.0	7.6	6.2	6.61
CPI for Food	4.7	2.1	2.2	3.02	6.4	6.5	5.5	6.14

Source: National Statistical Coordination Board and National Statistics Office

* - percentage point difference
** - 2001 is excluded as the 2001 and 2000 estimates of GDP are not yet linked.

Table 2. PSNA and FIES
Current Prices Growth Rates, in percent (1985 TO 2006)

	88/85	91/88	94/91	97/94	00/97	03/00	06/03

PSNA
1. Compensation inflow	45.5	121.1	22.6	87.8	110.6	66.7	50.5
2. Compensation inflow + property income	32.3	115.6	29.8	108.0	89.1	42.1	54.6
3. Households and Unincorporated Enterprises Disposable Income	31.9	58.7	25.8	49.2	33.8	30.1	31.4
4. Personal Consumption Expenditure (PCE)	32.8	64.0	37.4	40.0	32.5	27.9	41.4

FIES

1. Total Family Income	39.2	83.4	35.9	64.8	25.8	10.8	23.3
2. Total Family Expenditure	29.5	81.7	38.6	63.7	27.5	13.1	25.6

Source: National Statistical Coordination Board and National Statistics Office

Chart 1. Growth Rates: PCE, Compensation and Property Income Inflow
and Total Family Expenditure (At Current Price)

Chart

Data Sources: NSCB and NSO-FIES

Chart 2. Growth Rates: Gross Domestic Product (GDP), Total Family Income
and Households and Unincorporated Enterprises Disposable Income (At Current Prices)

Chart

Data Sources: NSCB and NSO-FIES


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