[In This Economy] Time for a new Philippine poverty line

Once more, the National Economic and Development Authority (NEDA) got tons of flak for citing figures about poverty. 

In a Senate presentation, Secretary Arsenio Balisacan of NEDA said that a family of five with a total monthly income of P9,581 or more is not considered “food-poor.” This food poverty threshold is equivalent to P1,916 per person per month, P61.8 per person per day, or P21 per meal per person per day.

Most people think this is utterly unrealistic and other-worldly, hence the backlash on NEDA. 

This is hardly the first time they got publicly shamed. Back in 2018, I wrote about the #NEDA10KChallenge which stemmed from a statement that “Ten thousand pesos is enough for a family of five to live a decent life.” (But just like now, NEDA was misquoted then because they never really mentioned anything about that being “decent” living.)

This time, though, the flak is different. On TikTok, people are openly cursing and hurling expletives at NEDA and Secretary Balisacan himself. The public outrage now is much more extreme.

To avoid this scenario in the future, NEDA ought to do its homework and create a new poverty line. 

Critiquing the old method

First, understand how the P9,581 food poverty line was computed. 

In poverty studies, it’s based on the “cost of basic needs approach.” The Food and Nutrition Research Institute (FNRI) suggests the meals a typical Filipino can eat in a day to get 100% of the Recommended Energy and Nutrient Intake or RENI for energy and protein needs (2,000 kilocalories on average) and 80% RENI for other nutrients. (Here’s a useful infographic.)

But aside from that, the food “bundle”— which is created per province — must be “locally available and are eaten in the province,” “lost-cost,” “visualizable,” and “can be cooked or eaten in the area.” No fancy stuff at all. See Figure 1 to see what the national food bundle looks like.

Figure 1. Source: PSA.

This national food bundle is then customized per province based on the food that’s locally available. And then government statisticians assign a peso value to the cost of that provincial food bundle, based on the “average of the monthly prices for the year.” Once they have the cost per person per day, they just multiply it by the number of days in a month, and then by 12 months.

I have sympathy for NEDA’s desire to stick to its current methodology in computing both poverty and food poverty thresholds. The reason is that a consistent methodology allows us to compare poverty estimates over time.

Figure 2 shows that in 2023 only about 2.7% of families were food-poor (meaning 97.3% of families were not food-poor), while only 4.3% of individuals were food-poor (meaning 95.7% of individuals were not food-poor). These figures were much lower compared to 2021.

Figure 2.

Like it or not, that’s a sign of progress. Tracking poverty will be so difficult if we change the methodology every three or two years or so.

Also, note that the statistics tell us that an overwhelming majority of Filipino families (97.3%) and individuals (95.7%) are not food-poor. Sometimes I suspect that part of the outrage over NEDA’s statements comes from the fact that middle-class Filipinos (who comprise about half of all families, based on one study) have difficulty putting themselves in the shoes of the subsistence poor who still live on less than P21 per meal per day (in 2023, there were still 4.8 million people of them out there).

New and old methods

On the other hand, there’s a strong case to be made that the poverty methodology is outdated, since it has been unchanged for decades. And there are various ways by which the poverty lines can be improved and updated. I discussed some ways in a 2019 piece. 

For instance, maybe it’s too conservative to assume that Filipinos just need 2,000 kilocalories per day (in other countries, food bundles are crafted using higher energy requirements). Or perhaps it would be better to account for the different energy needs of family members, some of whom are kids, some are elderly. In other words, some family members may need more energy per day than the rest. But the current poverty lines do not take this into account.

Here’s my suggestion to NEDA (full disclosure: about a decade ago, I was the head executive assistant of Secretary Balisacan during his first stint at NEDA). Instruct the Philippine Statistics Authority, one of its attached agencies, to develop a new, more realistic threshold to reflect the present realities of the Philippines, taking into account the suggestions of scholars and the best practices from abroad. But at the same time, continue measuring poverty using the old methodology, just so we can continue tracking poverty’s decline from years ago.

In other words, there’s nothing to stop NEDA from reporting two poverty measures, the old one and a new one. 

One drawback, of course, is that the new and improved poverty line may show that much more Filipinos might be considered poor or food-poor. This is a very likely outcome. (Note that Social Weather Stations data show that nearly half of all Filipino families they surveyed considered themselves to be food-poor.)

Higher poverty statistics of course don’t look good on the Marcos Jr. administration, which set for itself an ambitious target of achieving single-digit poverty (specifically 9% poverty incidence) by 2028.

But I think this is a reasonable halfway point to appease the incensed public and, at the same time, keep poverty comparable over time. 

The next poverty statistics will be out by 2025 (because the underlying survey they use is now done biennially instead of triennially). Here’s hoping NEDA won’t get lambasted again on social media two years from now. – Rappler.com

For more on this topic, watch my conversation with senior desk editor Isagani Cruz and business reporter Lance Spencer Yu in Newsbreak Chats: The controversy over the so-called NEDA P21 meal.

JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. JC’s views are independent of his affiliations. Follow him on Twitter/X (@jcpunongbayan) and Usapang Econ Podcast.