Which way will poverty go?

In 2023Q1, the national percentage of Self-Rated Poor households was 51, unchanged from 2022Q4. Last year, it had been 43 in Q1, 48 in Q2, and 49 in Q3. The halt in the rise of general poverty in Q1 this year is a relief.

The new percentage of Self-Rated Food-Poor households is 39, a statistically significant 5 points up from 34 in 2022Q4. (This is poverty in terms of food-quality, not food-quantity.) Food-poverty steadily grew last year, from 31 percent in 2022Q1; the 8-point rise in the past four quarters is even more significant.

Incidentally, the new food-poverty percentage is higher in Metro Manila (33) than in Balance Luzon (31). It is 45 in the Visayas and 52 in Mindanao.

On the other hand, the national Hunger rate improved to 9.8 percent from 11.8 percent. This is the proportion of households that suffered hunger at least once in the past three months, due to lack of food. Moderate Hunger (households that suffered only once or a few times) improved to 8.6 from 9.5, and Severe Hunger (those that suffered often or always) improved to 1.2 from 2.3.

The reason that Hunger can improve over time, while Poverty is steady and Food-Poverty worsens, is because the hunger proportion among the poor and among the food-poor can change from quarter to quarter. In any single quarter, however, it is always worse among the poor than among the non-poor. There is always some hunger among the non-poor also. Comparing 2023Q1 to 2022Q4, the hunger percentage among the non-food-poor fell substantially to 4.2 from 11.8, but among the food-poor it worsened slightly to 18.5 from 17.7. Incidentally, Metro Manila (10.7) now has the second-highest hunger percentage, after Mindanao (11.7). Its residents are obviously disadvantaged by their relative incapacity to grow their own food—Social Weather Stations (SWS) has data on this also. Hunger rates elsewhere are 9.7 in Visayas and 8.7 in Balance Luzon. All the numbers cited here are in the report, “Hunger recovers from 11.8% to 9.8%, but still not fully back to pre-COVID-19 levels” (www.sws.org.ph, 5/11/23), without need for further computation.

General poverty, food-poverty, and hunger are three separate and distinct dimensions of economic deprivation. Eradicating poverty and hunger are Number 1 and Number 2 of the United Nations’ Sustainable Development Goals. The surveys show them as dynamic, not stagnant, variables (“Changes in poverty since 1983,” 5/20/23).

Making forecasts of economic deprivation in future quarters is a task of applied econometrics. What are the factors that probably affect them the most? Do these factors also have quarterly data with which to build a model quantifying their relationship to deprivation?

General economic growth can play only a minor role. Gross national product, and its derivative gross national income (GNI), are factors that economists will immediately think of including in a forecasting model. They do have a relationship to poverty and hunger, i.e., a “trickle-down effect,” but it is weak and unreliable.

Real GNI per person (adjusted for inflation; World Bank data, base year 2017) doubled from about P82,000 in 1985 to about P168,000 in 2021. However, Self-Rated Poverty (SRP) among households only moved from 55 percent in 1985 to 51 percent in 2023Q1.

Consumer price inflation is the prime factor to consider. SRP hit its all-time low of 38 percent in 2019Q1. But it soon worsened very rapidly—undoubtedly due to consumer price inflation in 2019—and was already back up to 54 percent in 2019Q4. Then the pandemic struck, and interrupted face-to-face survey fieldwork in 2020Q1-Q3. (But we do know from mobile phone surveys that hunger hit a catastrophic 30 percent in mid-2020.)

In the case of hunger, food-price inflation is critical. Back when he was dean of the University of the Philippines School of Statistics (UPSS), present national statistician Dennis Mapa had research with his colleagues and students that estimated the links of the SWS quarterly hunger data to food-price inflation. It would be good for the UPSS people to take up where they left off.

The quality of response to natural disasters matters. SWS did a survey in December 2013 that distinguished victims and non-victims of supertyphoon “Yolanda,” which had struck the Philippines only a month earlier. Self-Rated Poverty among the victims was 72 percent, versus 52 percent among the non-victims. Since the national SRP was 55 percent, we concluded that the impact of Yolanda was to increase national poverty by 3 points (“Survey on the impact of Typhoon Yolanda on Filipino households,” Social Weather Stations, 2014).

What is happening to wages? To me, the biggest hindrance to forecasting economic deprivation is the lack of publicly available data on workers’ actual wages (as distinct from legislated minimum wages). I think there are items on actual wages in the questionnaire of the monthly Labor Force Surveys. If so, and if the items are implemented, then why are the findings unpublished?

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Contact: [email protected].

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