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Technical Notes
Poverty Statistics

Data for analysis on poverty were drawn mainly from the Family Income and Expenditure Survey (FIES) of the National Statistics Office (NSO). From the results of the FIES, the Population, Income and Employment Division (PIED) and Health, Education and Social Welfare Division (HESWD) of the NSCB came up with a different analytical format of the poverty statistics generated from tables prepared by the Technical Working Group on Income Statistics under the Inter-Agency Committee on Labor, Income and Productivity Statistics (IAC-LIPS) created by the National Statistical Coordination Board (NSCB).

Determination of Low Cost Diets
by Region, Urban-Rural

Low cost diets on a per capita basis are constructed for the regions of the country, subdivided into rural and urban. One-day sample menus for each urban/rural area of a region are provided by the FNRI taking into consideration the nutrient requirements, food commonly eaten in the areas, and the generally cheap foods. These menus, however, are for purposes of estimating the food threshold and not to be seen as prescribed menus. It is further stressed that these menus, being based on per capita RDA, are generally applicable to the average healthy Filipino performing moderate activities.

Nutritional Requirements

The dietary goal of the menu plans is to meet 100% of the per capita Recommended Dietary Allowances (RDA) for energy and protein and 80% of the per capita RDA for vitamins, minerals and other nutrients. The RDA for energy is 2,000 calories.
  

Food Commonly Eaten in the Area

The menus are typical of a Filipino diet and representative of the region. The typical Filipino pattern is composed of three meals and one snack and usual food combinations are followed, like having rice with a viand. Variation in food preference across regions has been reflected in the menus. The consumption patterns are based on the results of the latest Food Consumption Survey of FNRI.

Cheap Foods

The term "low cost" implies the utilization of cheap foods for the construction of the sample menus. Thus, nutritionally economical foods are considered to comprise the menu. This means that an additional quantity of such food items entails comparatively lower cost but has the same nutritional contribution as the other more costly foods.

On the other hand, some foods, although a little more costly, are included in the menu because they are the only source of the nutrient required. Further, to determine the low cost commodities, data from the Bureau of Agricultural Statistics and the Food Management Section of the FNRI are used. The ingredients of the respective menus are listed in weights (grams) based on an individual's intake.

The nutrient content is calculated and compared to the requirement. In cases where the 100% and 80% adequacy for specific nutrients are not met, the quantity of the foods to be served is increased in order that the nutrient requirement is realized. A process of validation with regional specialists as well as members of the Technical Working Group is done before the menu is finalized.

Determination of Own-Produced Components

For the purpose of costing the menus, the proportion of food bought and not bought are determined. These are based on the results of the National Nutrition Survey of the Philippines conducted by the FNRI.

Derivation of Costs

The menus are valued using average actual prices, but applying different prices for the bought and not bought components. For the bought component, the following sets of prices are used:

a) NSO Retail prices in Metro Manila for NCR;
b) the composite prices derived from the NSO urban provincial retail prices for urban regions outside NCR; and
c) prices paid by farmers for rural regions outside NCR as gathered by BAS.

For the own-produced commodities, prices received by farmers as gathered by BAS are used in cases where price data are available. In cases where data are not available, a price value is computed based on the price of more or less similar commodities and/on the average value of commodities for which price data are available.

To get the price per commodity, the required weight of the food in edible portion is converted into its "as purchased" (AP) equivalent. Price per commodity is then applied as follows;

(Wtf) x (Br)x(Ppc) + (Wtf) x(Or)x(Poc)

where:

Wtf = Total required weight of food item
Br = Proportion of bought
Ppc = Price per unit of purchased commodity
Or = Proportion of own produced
Poc = Price per unit of own-produced commodity

The total cost of the food menu (in terms of peso per day per capita) is then computed by aggregating the costs per commodity.
  

Computation of Food Threshold

The per capita per day food cost is 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 food threshold.

The monthly/annual food threshold derived is thus interpreted as the subsistence threshold - the monthly/annual income necessary to meet nutritional requirements.

Subsistence Incidence

The subsistence incidence is measured by determining the number of families with per capita annual income below the food threshold. The per capita annual income of each sample household in the Family Income and Expenditure Survey is compared to the food threshold to determine whether it is above or below the threshold. The magnitude of sample families determined to be poor are then blown up by the appropriate raising factor of the survey.

Poverty Threshold

In order to estimate the total poverty threshold (food plus non-food basic needs), the food threshold is divided by the proportion of the food expenditures (FE) to total basic expenditures (TBE) derived from the latest FIES using the FE/TBE's of families within the +/- 10 percentile of the food threshold.

TBE is the aggregate of expenditures on food; clothing and footwear; fuel, light and water; housing maintenance and other minor repairs; rental or occupied dwelling units; medical care; education; transportation and communications; non-durable furnishings; household operations and personal care and effects.

The proportion used is derived from patterns of expenditures of families/individuals whose annual per capita income falls below the annual per capita food threshold.

Poverty thresholds are computed for each region, on an urban/rural basis. The poverty threshold for the region is the weighted average of urban/rural thresholds. Threshold for areas outside NCR is the weighted average of thresholds of all regions outside NCR, on an urban/rural basis.

The threshold for the national level is estimated as the weighted average of the NCR and areas outside NCR, disaggregated by urbanity. The weights used are based on the population size in each survey round, i.e., 1985 to 1997 rounds, of the FIES.

Poverty Incidence

To get the magnitude of poverty, the per capita annual income of each sample family of the FIES is computed and compared to the respective annual per capita poverty threshold of the region (urban/rural) where the sample family resides. Those with incomes below or above the poverty threshold are identified.

The number of sample families falling below the poverty threshold is blown up to estimate the total number of poor families. For each region/urban-rural area, appropriate raising factors are used depending on the sampling fractions used by the NSO in their survey.

The number of families below the poverty threshold at the national level is determined by adding the number of families below the poverty threshold for each region, urban and rural.

The incidence of poverty (head count index) is computed by getting the percentage of the number of families below the poverty threshold to the total number of families.


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