Philippine E-Journals

Issues In Estimating The Poverty Line

Isidro P. David | Dalisay S. Maligalig

Discipline: Social Science

 

Abstract:

The Philippines' method of estimating poverty lines is analyzed and main differences from some Asian countries' methods are pointed out. The former follows a distinctive derivation of an annual food poverty line (fpl), which is simply the price of a prescribed low-cost, one-day menu multiplied by 365. The accuracy of this fpl depends on whether people eat according to the menu and how closely it approximates the actual annual food expense of the average poor Filipino. Both issues have not been thoroughly investigated empirically. Moreover, while other countries use an energy cut-off only, the Philippines specifies additional minimum requirements for protein, micronutrients and vitamins in the formulation of the menu. How this affects the level and comparability of the poverty lines has not been studied. Poverty lines expressed in national currencies and statistics derived from them are not comparable. However, it is suggested that poverty incidences derived directly from a common energy cut-off, e.g., the number of persons consuming less than 2100 kilocalories per day, are inter-country comparable. If countries could be prevailed upon to use a common food expenditure to total food expenditure ratio, e.g., 2/3, to inflate their fpls into total poverty lines, the comparability of the resulting poverty statistics would be improved further. Using Philippine data, it is shown explicitly that the universal practice of disaggregating statistics into urban and rural domains leads to discontinuous time series.