Explanatory Notes on the 2003 Poverty Estimates

E. Growth rate of average per capita income (at current prices) versus the growth rate of the poverty threshold provides an alternative way to analyze trends in poverty incidence

• Another way of validating changes in poverty incidence would be to compare the growth rate from 2000 to 2003 of the nominal average per capita income as against that of the poverty threshold.

• At the national level, the average per capita income increased faster than the poverty threshold (Table 5), indicating 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 as shown in Appendix Table D . 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 2.7 percentage point reduction in national poverty incidence from 2000 to 2003 is plausible.

Table 5
Poverty Incidence, NOMINAL Average Per Capita Income,
and Poverty Threshold by Region, 2000 and 2003

• For NCR, although the cost of basic necessities went up faster than the overall per capita income, poverty incidence decreased nonetheless since the increase in the average per capita income of families in the lowest income group, where all of the poor in the metropolis belongs, was more than sufficient to match the rising cost of basic necessities in the region. This contributed to the reduction in Metro Manila’s poverty incidence. In fact, the decrease in the region’s overall per capita income can actually be attributed to those in the highest income group, which could not have affected the estimate of poverty incidence.

• Similarly, for Region VIII, while the cost of basic requirements grew faster than the overall per capita income, poverty incidence dropped nonetheless since the rise in the average per capita income of families in the lower income groups, particularly those in the fourth lowest income group, were more than enough to cover the increasing cost of basic requirements in the region.

• For Regions IV-B, IX, and X, poverty incidence worsened (although only by a negligible rate in the case of Region X, that is, by 0.02 percent) since the increase in the overall per capita income was not sufficient to cope with the rising cost of basic necessities. In fact, the average per capita income of families went down from 2000 to 2003 for the third, fourth and fifth lowest income groups in Region IV-B, and for the three lowest income groups in Region IX.

• For Region XI, while the overall per capita income increased faster than the cost of basic commodities, poverty incidence increased nonetheless due to the insufficient growth in the average per capita income of the third lowest income group. That is, improvements in the income of most families in the said income group were not enough to cope with the rising cost of basic necessities in the region. In fact, the increase in the overall per capita income of the region was contributed mainly by the upper income groups.

• A similar trend was observed in Caraga. Despite the faster growth in the overall per capita income as against the cost of basic commodities, poverty incidence increased just the same since the expansion in the average per capita income of families in the fifth income group was not enough to deal with the faster rising cost of basic necessities. A closer examination of the distribution revealed that it was mainly the upper income groups that contributed to the increase in the overall per capita income of the region.

• For the rest of the regions, that is, Regions I, II, III, Calabarzon (IV-A), V, VI, VII, XII, CAR and ARMM, poverty incidence improved as the overall per capita income grew at a sufficient rate to cope with the escalating cost of basic necessities in these regions. Moreover, per capita income of families in the lower income groups grew more rapidly than the cost of basic necessities helping them cope better.

For these notes, inquiries may be made with Ms. Redencion M. Ignacio or
Ms. Glenita V. Amoranto at telefax number (632) 896-7981 or at their
e-mail addresses rm.ignacio@nscb.gov.ph / gv.amoranto@nscb.gov.ph.