Monday, October 8, 2012

Revisiting family income and expenditures: A better way to understand poverty issues, concerns

THE issues on poverty have arrested the attention of so many researchers who dealt with a number of studies that resulted to innumerable theories, methodologies and findings. For instance, the Global Development Research Center (http:// in its compilation of article on the causes of poverty and related issues presented two types of poverty: Individual and Aggregate. The former is explained by individual circumstances and/or characteristics of people such as amount of education, skill, experience, intelligence, health, handicaps, age, work orientation, time horizon, culture of poverty and discrimination, together with race, sex, and others. The latter is explained by two types of aggregate poverty theory: case and generic. According to case theories of poverty, aggregate poverty is just the sum of individual poverty, whereas the generic illustrates that poverty is explained by general, economy-wide problems, such as inadequate non-poverty employment opportunities, inadequate overall demand (macro problems, macro policy), and low national income (Less Developed Country). However, layman's concept equates poverty with the condition of low or slowly rising income that could not cope with costs that have risen fast or if not faster through inflation and rapid population growth. This gives people the impression that the levels of income and consumption are critical to determining who is poor. For Mr. Juan de la Cruz, being poor is knowing exactly how much everything costs, because you have to budget your income against your expenditure. The quality of poverty estimates relies heavily on the data sources. One of the sources of data for poverty estimation in the Philippines is the Family Income and Expenditure Survey (FIES). The FIES is the source of detailed information on income and expenditures of Filipino families. The National Statistical Coordination Board (NSCB) is in charge of releasing the official poverty statistics that are based on (per Capita) income data sourced from the FIES. The FIES is a nationwide survey of households undertaken by the National Statistics Office. It is the main source of data on family income and expenditures. Total family income includes primary income and receipts from other sources received by all family members during the reference period as participants in any economic activity (either as laborer, proprietor, capitalist or entrepreneur) or as recipients of transfers, pensions & grants, among others. On the other hand, family expenditures refer to the expenses or disbursements made by the family purely for personal consumption during the reference year. These excludes all expenses in relation to farm or business operations, investments ventures, purchase of real property and other disbursements which do not involve personal consumption. What is the status of the family income and expenditures of Northern Mindanao compared to national figures? In 2009, the average annual family income of Filipino families in Northern Mindanao was posted at P165 thousand which was 16.2 percent higher than the 2006 estimated average of P142 thousand. Similarly the national figure also manifested an increase of 19.1%, that is, from 173 thousands in 2006 to 206 thousands in 2009. Adjusting to the inflation rate between 2006 and 2009, the average annual family income in 2009 posted at P165 thousand would be valued at P98 thousand at 2000 prices. However, there is a big disparity in the average income between the bottom 40 percent and the upper 60 percent. The average income for the bottom 40% is 55 thousand while the average income for the upper 60% is 238 thousand. On the national scope, interesting but frustrating data on family expenditures reveal that poor families spent 64 thousand annually on the average which is surprisingly two thousand pesos more than their average annual income. In contrast, families in the upper 70 percent income group spent 224 thousand pesos a year, on the average; hence, could generate savings of 44 thousand pesos in a year, on the average. With regard the Northern Mindanao data, there is a savings of 43 thousand pesos in a year, on the average, for the upper 60% income group which spent 195 thousand pesos in a year, on the average. However, in the bottom 40% income group, they spent all what they have earned such that they did not have any savings at all. Nevertheless, combining all income groups, a savings of 26 thousand was noted in 2009. The 2009 Gini Coefficient was recorded at .4737 in Northern Mindanao down by 1.4 percent from .4806 in 2006. A lower gini coefficient indicates a movement towards a more equal income distribution among families.

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Partner Agencies NSO Central Office National Bureau of Invistigation Philippine National Police 10 Department of Interior and Local Government National Economic and Development AuthorityBureau of Agriculture Statistics DepEd Professional Regulatory Board Civil Service Commission Department of Foreign AffairsNational Statistics Coordination Board

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