Philippines Needs Updated Poverty Measures, Broader Data: PIDS Researchers

Poverty statistics should go beyond a single monetary threshold and better account for changing living standards, vulnerability and households moving in and out of poverty, Philippine development researchers said at a De La Salle University-Angelo King Institute for Economic and Business Studies (DLSU-AKI) seminar on Tuesday. Professional statistician and senior research fellow at the Philippine Institute for Development Studies (PIDS) Jose Ramon G. Albert said poverty figures are not automatic facts because they depend on definitions, data sources and technical choices, including the welfare indicator and poverty line used. “Change any of those choices and the numbers will change,” Mr. Albert said, emphasizing the need for greater data literacy when interpreting poverty statistics. His remarks were echoed by former PIDS president and emeritus research fellow Celia M. Reyes who said the Philippines should consider adopting additional poverty measures based on higher standards while retaining the existing absolute poverty measure to continue identifying people at the bottom of the income distribution. Ms. Reyes, who also chairs the Technical Committee on Poverty Statistics, said the current methodology uses a least-cost menu designed to meet minimum dietary requirements. She said the updated methodology, which was delayed partly because pandemic-era data did not represent “normal” conditions, is currently being validated and is expected to be released soon. “There’s room for coming up with other measures, additional measure of poverty, in addition to what we have right now,” Ms. Reyes said. She cited the Food and Nutrition Research Institute’s (FNRI) “Pinggang Pinoy” food guide as an example of a potentially higher standard, noting that a healthier diet with more fruits and vegetables would also result in a more expensive food basket. Mr. Albert questioned whether the country’s poverty threshold remains appropriate as the Philippines has moved into the World Bank’s upper-middle-income classification. He said that using different international poverty lines produces significantly different estimates of Philippine poverty. At the World Bank’s $8.30 threshold, he estimated that about 59% of Filipinos would be considered poor, while a threshold of around $6 could put the rate at roughly 30% to 35%, based on his calculations. “So in other words, if we’re thinking simply, we’re already thinking that maybe we’re undercounting the poor if we’re using the higher operating income standard of the World Bank,” Mr. Albert said. He stressed, however, that the Philippines should determine its poverty standards based on its own policy needs rather than simply adopting an international benchmark. “The bottom line is that there is no single best poverty number,” Mr. Albert said, noting that poverty incidence measures prevalence, while the poverty gap measures depth and the squared poverty gap measures severity. BEYOND THE POVERTY LINE Both Mr. Albert and Ms. Reyes highlighted the need to distinguish between people who are persistently poor and those who fall into poverty because of shocks. Ms. Reyes said the current methodology effectively treats poor people as a homogeneous group, despite differences between chronic poor, who remain poor over long periods, and transient poor, who move in and out of poverty because of shocks. A study using Family Income and Expenditure Survey data from 2003, 2006 and 2009 showed that about half of those classified as poor in 2009 were transient poor, she said. “This is one of the most important challenges in terms of data production,” Dr. Reyes said, adding that the two groups require different interventions. Chronic poverty requires more structural programs addressing the causes of deprivation, while temporary assistance may be more appropriate for households affected by short-term shocks such as illness or other disruptions. Mr. Albert similarly pointed to the vulnerability of households just above the poverty line. He said simulations on potential price shocks showed that millions of people who were not initially poor could fall into poverty, demonstrating the importance of identifying the “near-poor” in designing social protection programs. “Even if you are not poor today, it does not mean you are safe from poverty in the future,” he said. COMMUNITY LEVEL DATA Ms. Reyes said the Community-Based Monitoring System (CBMS), institutionalized through Republic Act No. 11315, could help address gaps in poverty data by generating household- and individual-level information. Unlike sample surveys that provide an overall picture of poverty, CBMS conducts a census of households and collects information on multiple dimensions of welfare. The system can be used for diagnosing poverty, identifying its causes, designing and targeting programs, monitoring impacts, and improving transparency and accountability in local governments, she said. Dr. Reyes also said regular CBMS data collection could generate panel data that would allow researchers to track households as they move into and out of poverty. This would help policymakers distinguish chronic from transient poverty and tailor interventions accordingly. CBMS also collects information on non-income dimensions of poverty, allowing researchers to examine whether households that are income-poor are also deprived in areas such as education and health. Mr. Albert said multidimensional poverty measures provide a complementary perspective because income alone does not capture deprivation in health, education, housing and other areas. However, he cautioned that multidimensional poverty figures can also vary depending on the indicators, weights and data sources used. “Neither measure captures everything on its own,” he said, referring to monetary and multidimensional poverty. Dr. Reyes said the multidimensional approach could likewise be strengthened through the broader data collected under CBMS. BETTER TARGETTING NEEDED The researchers said improving poverty measurement should ultimately lead to better policy rather than simply producing different poverty figures. Dr. Reyes said identifying households according to their type and vulnerability would allow government to provide more appropriate assistance, particularly as the Philippines faces recurring natural disasters, price shocks and other disruptions. “It’s very important to have a risk assessment to identify which are the population groups that are at risk or vulnerable, or most likely to be affected by specific shocks,” she said. Mr. Albert similarly called for targeted interventions rather than blanket subsidies, noting that price increases in fuel, transportation and food can affect households differently. He said policymakers should consider not only those already below the poverty line but also households vulnerable to falling below it. Both researchers ultimately stressed that poverty statistics should be treated as tool