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Technical Notes
Notes on the Official Poverty Statistics in the
Philippines 
Series 2003-1
July 2003
Compilation MethodologyA. Unit of Measure
B. Reference Period
C. Coverage/Scope and Limitations
a. The sample size for some of the provinces may have not been enough to produce reliable poverty estimates. Some researchers have computed coefficients of variation for the estimates which in some of the provinces were higher than ten per cent.
(See Annex 2003-1-2 [
158 KB]for the sample size by province).
b. The reference period for income data is the past semester, which may pose difficulty for some respondents to recall his/her income, and those of the other family members, specifically in the case of non-salary/wage earners and those with income coming from other sources.
c. There are varying reference periods for the expenditure items in the FIES:
- Past week - Food, alcoholic beverages and tobacco
- Past month - Fuel, light and water; transportation and communication; household operation; personal care and effects
- Past semester – Clothing, footwear and other wear and the rest of the expenditure items
For all these items, the respondent has to recall the family expenditure for the given reference periods and it may be difficult and taxing for the respondent to remember the details of the family expenditures.
For example, for food, alcoholic beverages and tobacco, the reference period is the past week. Aside from the respondent possibly having difficulty in recalling food items consumed at home and outside the home, the respondent still has to figure out the actual weekly food consumption of the family out of the total weekly purchases on food. However, he may possibly remember the weekly purchases more than he can recall the actual consumption.
Similar problems may arise in recalling actual expenditure for transportation and communication, household operation, personal care and effects, clothing, footwear and other wear and for the other expenditure items.
In addition, the representativeness of the reference period will have implications on the accuracy of the annual estimate.
d. In cases where a family shares some expenditure items with another family (e. g., fuel, light and water), there may be problem with the respondent separating his family’s consumption from the other family. This is not so with income as only the income of the family of the household head should be reported.
D. Estimation/Compilation Methodology
D1. Computation of the Food Threshold (FT)
Main documents needed:
- Regional menu (100% adequate for energy and protein and 80% adequate for vitamins and minerals)
- BAS retail price data, by province
- BAS farmgate price data, by province
- NSO retail price data, by province
General Procedures:
Each of the ingredients in the menu is priced using available price data and entered in a worksheet developed for the purpose.
Using the worksheet, the urban and rural food thresholds are computed, each with bought and own-produced components. The annual per capita food threshold is computed as:
FT = (cost per capita of the one-day food menu ) x (30.4 days/month)
x 12 months
D2. Computation of the Subsistence Incidence (S)
Given the food threshold, the subsistence incidence is obtained for urban and rural areas which is computed as:
where:
F = number of families (individuals) with per capita annual income less than the per capita annual food threshold/line
n = total number of families (individuals)
D3. Computation of Poverty Threshold (PT)
where:
FE = actual food expenditure of families within the +/-ten percentile of the food threshold
TBE = total basic expenditure of families within the +/- ten percentile of the food threshold. TBE is an 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 furnishing; household operations and personal care and effects
D4. Computation of Poverty Incidence (P), Income Gap (I), Poverty Gap (PG) and Severity of Poverty (SP)
The following formula are used:
where:
Q = number of families (individuals) with per capita annual income less than the per capita poverty threshold/line
n = total number of families (individuals)
where:
Z = per capita poverty threshold/line
Xi = per capita income of the ith family
q = number of families below the poverty threshold
where:
Z = per capita poverty threshold/line
Xi = per capita income of the ith family
q = number of families below the poverty threshold
n = total number of families
where:
Z = per capita poverty threshold/line
Xi = per capita income of the ith family
q = number of families below the poverty threshold
n = total number of families
E. Validation of Poverty Estimates
The methodology for the computation of the official poverty statistics includes validation/cross-check of results. In the estimation of thresholds, the validation at the worksheet level includes checking the movement of prices of commodities in terms of price growth rates and the Consumer Price Index (CPI), careful checking/cross-checking of entries and formulas in the worksheets, and documenting estimation procedures done for problem commodities (no price data from NSO and BAS) for reference of the checkers. Estimates of subsistence and poverty incidence are also validated by comparing them with other related indicators. There are also technical discussions held among the members of the NSCB Poverty Team and presentations are made to the Technical Committee on Poverty Statistics (TC PovStat).
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