De La Salle University

School of Economics
Economics Department
Revisiting Poverty in the Philippines
In partial fulfillment of the requirements for
ECONDEV V24
Submitted To:
Ms. Paulynne Castillo
Submitted By:
Pauline Sombillo
March 18, 2015
I.

Introduction

Poverty has always been present around the world, not just in the Philippines. The poorest people
usually have characteristics like being unable to eat at least three times a day, less access to
health, education, and other basic services. Often than not, they are usually marginalized from
society and have little representation or voice in public. The poor are treated less likely than the
rich and those with power and because of the inequality, the poor remains poor while rich are
getting richer.
Based on the recent report of National Statistical Coordination Board (NSCB)1, the overall
poverty incidence of the Philippines went down from 26.3 in 2009 to 25.2 in 2012. Although this

is a good indicator that the poverty is improving since then, the fact remained that the Philippines
is still behind and growing not as fast as other countries.
The researcher aim to revisit the history of poverty measurement in the Philippines and what
drove the current methodology to be the way it is right now. Criticisms will also be tackled in a
way such that results from each survey will be compared and checked whether the change in the
measurement of poverty aided the alleviation of poverty.
II.

History of Poverty in the Philippines

National surveys of family income and expenditures were done as early as 1957, which was
mainly
1. This website of the former National Statistical Coordination Board is now operated by
the Philippine Statistics Authority (PSA). Contents are being integrated into the PSA
website. The Philippine Statistical System (PSS) is a decentralized system - policymaking body, data producers, users, research and training institutions, and data providers
The PSS is the government-wide system of providing statistical information and services
to the public. (http://www.nscb.gov.ph/)
used for determining consumer basket weights for monthly consumer price indexing During the
mid- 1970, academic researchers constructed the first poverty line which was then applied to the
distributions of income or expenditures from the existing surveys in order to estimate the
unofficial poverty incidence. (Abrera, 1976)
In 1974- 1975, the Development Academy of the Philippines (DAP), conducted a comprehensive
research project on social indicators. The viability of existing statistical indicators were reviewed
and proposal to effectively measure national well- being through quantification of poverty were
also laid out. (Mangahas, 1977) The project made use of subjective and perspective type of

question to generate relevant social indicators for the years 1981- 1983, both on metropolitan and
on a national level.
The DAP project was able to continue generating relevant social indicators through the
establishment of Social Weather Stations (SWS) in 1985. It was not until 1986 that the Aquino
administration officially set a poverty line. It made use of the data from the available Family
Income and Expenditure Survey conducted on 1985 to measure the poverty incidence. In 1987,
NSCB, through its inter- agency Technical Working Group (TWG), released its first set of
official Poverty Statistics using the income and expenditure approach of FIES publicly. This also
computes Food Threshold, Poverty Threshold, Subsistence Incidence, and Poverty Incidence. On
December 8, 1992, the NSCB then approved and adopted a revised methodology in order to
improve its services. Asian Development Bank even funded a comparative study on the
methodology of Philippines and Indonesia and trace the unexpected substantial difference
between the poverty incidence estimates of the two. Because of the perception of possible
overestimation of poverty in the Philippines, TWG undertook several exercises toward
improvement. NSCB used the revised methodology (Figure 1) to recalculate poverty incidence
series at a regional level on the years 1985, 1988, 1991 and used this for the succeeding years
(1994 and 1997).

Note: Adapted from Official Poverty Statistics in the Philippines: Discussion of Issues by Dr.
Romulo A. Virola and Jessamyn O. Encarnacion Copyright 2003 by National Statistics
Coordination Board.
Because the Philippines needs to keep up with increasing level of globalization, the NSCB again
revised the methodology which allows statistics to be compiled at a provincial level on February
22, 2002. This is in response to the clamor for poverty incidence at lower levels of
disaggregation. This includes provincial statistics on food and poverty thresholds and incidence,
income and poverty gaps, the FosterGreer Thorbecke12 2 measures to be released every 3 years
and statistics on food and poverty thresholds to be released annually.
2. A generalized measure of poverty within an economy combining information on the
extent of poverty (as measured by the headcount ratio), the intensity of poverty (as
measured by the poverty gap) and inequality among the poor (as measured by the squared
poverty gap).

Note: Adapted from Official Poverty Statistics in the Philippines: Discussion of Issues by Dr.
Romulo A. Virola and Jessamyn O. Encarnacion Copyright 2003 by National Statistics
Coordination Board.
Currently, there are three methods the Philippines is using to measure poverty. The first one is
based on the official criteria by the government, the income approach. The second is computed
based on expenditure, which is used by the World Bank. The last one is applied by the NSO
(National Statistics Office) and is based on access to minimum basic infrastructure.
There are a lot of poverty statistics generated by different agencies in the Philippines. Most of the
information understandingly overlap and it is in the discretion of the users as to which one to
trust and use in order to make the best policy measure and implement the most appropriate
intervention.
III.

Measuring Poverty

A successful implementation of policies on poverty reduction requires various steps a researcher

or the government needs to take. First and foremost, one needs to know how many individuals or
families are poor. In the case of the Philippines, a poverty line is generated in order to determine
if an individual or a family is poor or not. A Poverty Line or a Poverty Threshold refers to the
cost of the basic food and non-food requirements (valued in peso). The basic non-food
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requirements cover the non-food expenditure items of the Total Basic Expenditures. In the
Philippine official methodology, the poverty line may be viewed as the minimum income
required to meet the food requirements and other non-food basic needs. (1997 Philippine
Poverty Statistics, NSCB) If this is already established, researchers can already measure poverty
incidence through conducting a headcount of families who are poor. Poverty Incidence refers to
the proportion of families (or population) with per capita income less than the per capita poverty
threshold to the total number of families (population). (1997 Philippine Poverty Statistics,
NSCB) However, a simple headcount does not tell how poor an individual or a family is, it is the
poverty gap that determines how poor an individual or a family is. By definition, poverty gap is
the total income shortfall (expressed in proportion to the poverty line) of families with income
below the poverty threshold, divided by the total number of families (1997 Philippine Poverty
Statistics, NSCB). The determination of poverty incidence must not focus on the Philippines as a
whole, it must cover an in depth measurement on a per category basis (e.g. per region, per
industry sector) so that the government know where should they focus on and attend to. Also, its
not just the poverty incidence in which government should be able to generate, but they should
also determine the aspects, be it in the form of food, housing, access to health care or education,
in which the identified poor needs the most. This is usually done by studying the
characteristics of the poor and creating a poverty profile. Without all of these, the government
will just be wasting their money creating policies that are not suitable with what the poor needs.
The government wouldnt know where and what kind of policies should be implemented, and
they might generalize that this certain aid is needed. All of these will lead to government
wasting their available resources and inefficient policies.
IV.

Trends of Poverty Statistics

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Note: Adapted from Neglecting Mindanao by Diokno, Benjamin E. Copyright 2012

by National Statistics Coordination Board.
Even though the poverty incidence on a national level improved a little, meaning Filipinos living
below the poverty line is decreasing, the improvement in the poverty situation on a per region
basis is uneven. The table above shows that the poor is usually found in the rural areas. The bulk
of them are in Mindanao, followed by Visayas. Specifically, five out of six regions in Mindanao
registered a very high proportion of the population who are below the poverty threshold, ranging
from 42% to 52.9%. Poverty even increased in three regions, Davao, ARMM and
SOCCSKSARGEN. Meanwhile, even though poverty incidence in Visayas is declining, it is still
below normal poverty threshold. These imply that the administration is not focusing on
improving the state of living in these areas. The trend of poverty incidence in Visayas and

Mindanao are consistent with the poverty incidence per sector. The source of income of people
from these regions usually comes from fishing and farming. Based from the recently released
Poverty Incidence for Basic Sectors, poverty is highest among fishers, farmers, and children.
Five out of nine of the basic sectors like fishermen, farmers, and children still have a higher
poverty incidence than the general population. Performance in the agricultural sector is weak that
is why it failed to raise incomes of the rural poor. Government must focus on improving and
modernizing the agricultural sector by promoting investment that can help increase farmers
productivity.

Note: Adapted from Poverty Incidence for Basic Sectors Copyright 2012 by Philippine Statistics
Authority
The increasing number of poverty incidence in the urban area, which is the National Capital
Region is also notable in the tables presented above. This is mainly because of increasing
number of internal migration, which is driven by employment opportunities. However, the excess
supply of labor combined with the poor ability of local authorities to manage immigration
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resulted to increased disparities and expansion of slum areas in cities, hence the emergence of
informal settlers. The growth of informal settlers and other immigrants constituted to a large
percentage of the income class under 40, 000 that rely on other sources of income. Poor
households usually have multiple jobs to get their income from, which is usually categorized as
low- wage, informal occupation.
Note: Adapted from
Total and Average Annual Family Income and Expenditure by Income Class and Region.
Copyright 2012 by Philippine Statistics Authority
V.

Conclusion

The ultimate objective of measuring poverty is to help the poor improve their lives. Having a
good system in monitoring poverty is the first step in successfully alleviating poverty. Given the
availability of a lot of indicators, it is indeed important that users know and understand what to
choose and how to use these properly because these will be used in guiding the implementation
and continuing analysis of policies and programs, so that timely action can be taken to address
the weaknesses/problems.
Poverty is a well-studied topic in the Philippines. Poverty incidence has been studied from
different perspectives - expenditure or consumption, self- rated and the most conventional
measure - income. Based from the data gathered above, the Philippines, through constantly
changing its methodology in measuring poverty, has been successful in alleviating poverty on a
national level. However, it is evident that there is still a weak local government capacity for
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implementing poverty reduction programs in some parts of the country. Majority of the
population of the country are not financially well off and this suggest that poverty reduction
policies and programs should be further strengthened. Also, multidimensional responses to
poverty reduction are needed. The poverty problem is multidimensional, therefore, people at
stake from different sectors and agencies must work hand in hand to implement poverty
reduction programs. Convergence has been the right approach and this must continue to be
practiced more eectively.
VI.

References

Albert, J., Collado, P. (2004, October). Profile and Determinants of Poverty in the Philippines. 34, 10-11.
Asian Development Bank. (2009). Poverty in the Philippines: Causes, Constraints and
Opportunities. 10-12, 79-86.
Chavez, J., Cruz, J., Poverty and Marginalization in the Philippines: A Primer. 1-6, 17-24.
David, I., Maligalig, D., & Virola R. Issues in Estimating the Poverty Line. 1-13.
Diokno,

B.

(2013)

Neglecting

Mindanao.

Retrieved

15

March

2015

from

http://www.econ.upd.edu.ph/perse/?p=2404.
Le Thi Ai Lam (2005, August). Human Resource Development and Poverty in the Philippines.
PIDS Discussion Series 2005-17. 5-23.
National Statistical Coordination Board. (2012). Family Income and Expenditure Survey 2012.
Retrieved from http://web0.psa.gov.ph/content/2012-fies-housing-tables
Philippine Statistics Authority (2014). Poverty Incidence for Basic Sectors. Retrieved 15 March
2015

from

http://www.nscb.gov.ph/pressreleases/2014/PSA-%20PR-20140704-SS2-

01_poorestsector.asp

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Philippine Statistics Authority (2012). Total and Average Annual Family Income and
Expenditure. Retrieved 15 March 2015 from http://web0.psa.gov.ph/content/2012-fies-statisticaltables.
Reyes, C. (2002, December). The Poverty Fight: Have We Made an Impact? PIDS Discussion
Series 2002-20. 53-56.
Reyes, C., Valencia, L., Poverty Reduction Strategy and Poverty Monitoring: Philippine Case
Study. 15-19.
Schreiner, M. (2014, June 8). A Simple Poverty Scorecard for the Philippines. 10-11, 59-82.
Retrieved from: microfinance.com/#Philippines.
Shah, A. (2014, September 28). Causes of Poverty. Retrieved February 6, 2015, from Global
Issues: http://www.globalissues.org/issue/2/causes-of-poverty
Virola, R. (2003, July). Statistical Challenges on Poverty Reduction in the Philippines. 9-14.
Virola, R. and Encarnacion, J., (2003) Official Poverty Statistics in the Philippines: Discussion of
Issues. National Statistics Coordination Board.

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