Terraces of poverty

This is a re-posted opinion piece.

When BusinessWorld’s headline last Monday said “Poverty numbers worsen,” it was only comparing September 2011, when SWS’ national Self-rated Poverty (SRP) incidence was 52 percent, and June 2011, when it was 49 percent. But a single quarter’s movement does not make a trend from which to expect continued worsening.

The June 2011 figure of 49 percent was first reported by BusinessWorld on July 8, 2011, under the headline “Gains vs poverty uneven,” since it was a decrease from 51 percent in March 2011. Thus, neither did the single quarter’s drop from March to June make up a trend from which to expect continued gains. It was only a single drop, since the previous SRP in November 2010 had been 49 percent.

In fact, given the 3 percent error margin of SWS’ standard national sample size of 1,200 households, the last four SRP percentages of 49 in November 2010, 51 in March 2011, 49 in June 2011, and 52 in September 2011 are all statistically equivalent. Thus poverty has been flat for a full past year.

In fact, poverty has been flat at about 51 percent since 2004.

The way to avoid being distracted by mere quarter-to-quarter changes is to focus on the annual average of the quarterly SRP figures. (This amounts to pooling the data from a total sample of 4,800 households per year.) Annual averages are included in the quarterly SWS reports, filed at www.sws.org.ph., from which BusinessWorld draws its published pieces.

In the previous seven years, the annual average percentages of families rating themselves as poor were: 51 in 2004, 53 in 2005, 54 in 2006, 50 in 2007, 53 in 2008, 49 in 2009, and 48 in 2010, all of which average 51. Moreover, every annual number since 2004, and every number for the first three quarters of 2011, is statistically equivalent to 51.

From 2004 to the present, poverty has been flat, as though on a terrace. This flatness implies that the substantial growth of real (in constant 2000 prices) Gross National Income per capita from P62,977 in 2004 to P80,429 in 2010, i.e. by 27 percent, has not had any effect on poverty.

Before that, poverty was flat at about 61 percent in 1995-2003.

The annual average percentage of self-rated poor families was 63 in 1995, 59 in 1996, 59 in 1997, 61 in 1998, 61 in 1999, 57 in 2000, 62 in 2001, 63 in 2002, and 60 in 2003. The average of these annual numbers is about 61. Every number (except, marginally, the 57 of 2000) is statistically equivalent to 61, and so the trajectory during 1995-2003 was more or less flat, as on a terrace.

Moreover, every number of 1995-2003 is well above the average of 51 from 2004 to third quarter 2011. Thus, during 1995-2003, poverty was on a terrace about 10 points higher than the present one.

And before that, poverty was flat at about 66 percent in 1988-1994.

The average annual percentage of self-rated poor families was 66 in 1988, 62 in 1989, 68 in 1990, 67 in 1991, 66 in 1992, 65 in 1993, and 68 in 1994. The average of these seven numbers is 66; their trajectory was more or less flat, as on a terrace, but 15 points higher than the present one. (In 1988, SWS had only one national survey. The 1989-1991 figures are averages of two surveys per year; since 1992, the Social Weather Surveys have been quarterly.)

Thus, from the long perspective of 1988-2011, poverty has fallen, not gradually, but by drops from “terrace 66” to “terrace 61” to “terrace 51”. Since 66 percent was the level at the start of the 1990s, the corresponding Millennium Development Goal for 2015, using the SRP instrument, would be 33 percent. We are still far from this goal.

The new Philippine Development Plan is wrong in guessing (p. 20): “For every percentage-point increase in income-growth in the Philippines, poverty incidence falls by about 1.5 percentage points.” In the first place, this piece shows that the effect is not at all smooth. Secondly, the 1.5 coefficient was based on (official) poverty data up to 2003 only; with post-2003 data considered, the historical elasticity was much less.

Remember that poverty see-sawed during 1983-87. This depiction of poverty dropping from terrace to terrace does not imply that economic growth surely pushes poverty down to lower terraces. That would just be “trickle-down” economics again. Reversals are possible.

SRP was a moderate 55 percent in 1983, when surveyed nationwide for the first time (by the Development Academy of the Philippines). But it hit 74 percent in 1985 (surveyed by the Bishops-Businessmen’s Conference), obviously due to the hyperinflation of 1984-1985. It subsided to averages of 67 percent in 1986, and even to 47 percent in 1987, as consumer prices stabilized, only to rise to the upper 60s starting in 1988, when double-digit inflation returned.
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The population handicap. Surveys regularly show that big families are more vulnerable to poverty and hunger. Here are percentages from the SWS survey of September 2011 (with many thanks to Josefina Mar for the tabulation):

Household Self-rated Involuntary
Size Poverty Hunger
1-2 44 17.7
3-4 51 19.9
5-6 54 21.1
7-8 48 25.1
9+ 68 30.6
Philippines 52 21.5
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Contact SWS: www.sws.org.ph or mahar.
[email protected].
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By: Mahar Mangahas – Social Climate
Source: Philippine Daily Inquirer, Nov. 19, 2011
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