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New Methodology Distorts Reality of Poverty in Philippines

Research group Ibon criticizes the government’s new poverty methodology as unreflective of the real situation of poor Filipinos, saying that the adjustments made on the already flawed methodology has further distorted the picture of poverty in the country.

The National Statistical Coordination Board (NSCB) yesterday released official poverty figures based on adjustments on the poverty estimation methodology, which the agency approved early this month. The new method supposedly estimates a food bundle, which is important because some three-fifths of the income of the poorest half of the population is spent on just food.

However, the estimates are based on a “least cost” food bundle, which the research group says may not be available to most Filipinos. This bundle apparently also relies on “revealed preference” which seems to mean that it reflects actual spending, but may be a pattern of spending not so much by choice but rather forced on Filipinos who adjust their spending according to their poverty.

Moreover, the revised methodology now pegs the official poverty threshold, or the amount supposedly necessary for a tolerable standard of living, at PhP37 per person per day. This is down from the previous national poverty line of PhP41 and effectively reduced the number of poor by 4.6 million without really improving the poverty situation.

The research group says it is also disappointing that the government will only generate parallel estimates according to the old and new methodologies for just three years. This will make poverty estimates over time even more incomparable aside from, perhaps intentionally, giving the impression that poverty has been markedly decreasing. IBON also asks how the new methodology will affect the formulation of future poverty alleviation programs, especially amid rising prices and joblessness.

The government should cut poverty by increasing the incomes of Filipinos instead of reducing the poverty threshold. This is a similar situation to the change in the definition of unemployment in April 2005 under the previous Arroyo administration which statistically reduces the number of unemployed by some 1.5 million and the unemployment rate by around 3.6 percentage points without actually reducing the number of jobless Filipinos.