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The Php10,481.00 Estimated Average Poverty Threshold in the Philippines, Truth or Fiction?


April 2019, the Philippine Statistics Authority (PSA) had released the Poverty Threshold numbers for the first semester that is amounting to Php10,481 for a family of five (5). Depending on where you are in the country, this amount may or may not meet your family's living expenses. Let us breakdown the numbers and see if this is plausible to apply.

The Poverty Threshold in the Philippines by the Numbers
"Six Boys Standing Near Trees and Houses" by Fancycrave is licensed under CC0

Disclaimer

Before you continue reading the article, kindly take time to read this disclaimer statement.

I am not claiming to be an expert on this field. The way I understood the mathematical formulas and the reference material may or may not be correct. Given that, the content may not be 100% accurate. If there are flaws found in this article, contact the author or comment below. Read the full disclaimer statement here

Thank you.

What is Poverty Threshold?

A quick search to PSA reveals that "Poverty threshold (PT) is the minimum income/expenditure required for a family/individual to meet the basic food and non-food requirements".

As further noted, the basic food requirements is based on 100% adequacy for the Recommended Energy and Nutrient Intake (RENI). Meaning, each member of the family is sufficiently nourished. The other non-food requirements are based on the following:

  • clothing and footwear;
  • housing;
  • fuel, light, water;
  • maintenance and minor repairs;
  • rental of occupied dwelling units;
  • medical care;
  • education;
  • transportation and communication;
  • non-durable furnishings;
  • household operations; and
  • personal care & effects.

How is the Poverty Threshold Computed?

The formula is PT = FT / (FE / TBE)

The Poverty Threshold Formula

The Food Threshold (FT)

The Food Threshold Formula


The FE is defined by PSA as "The actual food expenditures of the family during the reference period, including food items received as gifts and consumed by the family during the reference period.". While TBE is defined as "The aggregate of expenditures on food and non-food requirements".

Determining the poverty line is usually done by finding the total cost of all the essential resources that an average human adult consumes in one year.

Time to Crunch the Numbers

For example, in a very ideal scenario that your day's meal is only worth Php100. Computing the FT will be:

FT = (100 x 30.4) x 12
FT = 3,040 x 12
FT = 36,480/year

You still don't account here the snacks and the occasional eat out expenses. Let us just say that you are disciplined enough to stay on course. Still, it is at Php36,480 for the whole year!

But the PT is for a family of five so we need the other family members data for this. To make things simple, you just lower the FT amount by 5% which is 1,824.

Example Family Member FT breakdown:

  • Father - 36,480
  • Mother - 34,656
  • Child 1 - 32,832
  • Child 2 - 31,008
  • Child 3 - 29,184

FE = 36,480 + 34,656 + 32,832 + 31,008 + 29,184
FT = 164,160

The formula to determine the percentile is kth percentile * total number of participants = index. The result will then be used to count the number of items from lowest to highest. As per the formula above, the percentile is 10. The computation will be:

10% * 5 = 0.5 - because you only have 5 sample data, you just accept the answer as 1. Then counting from lowest to highest we get 29,184 as our percentile value.

To calculate the TBE you need to account non-food expenses that each of your family members will incur for a year. For simplicity's sake, you only account the following: Rent, Water, and Electricity expenses.

For example, in a very ideal scenario your expenses are the amounts below:

Rent is 2000
Water is 250
Electricity is 500

Total amount is Php2,750/month or Php33,000/year.

Because you are just sampling your own family, you just assume that the 10 percentile for the TBE is Php30,000.

The Moment of Truth

You have now the needed values, time to reveal if the PSA's PT value is close to yours.

PT = FT / (FE / TBE)
PT = 164,160 / (29,184 / 30,000)
PT = 164,160 / 0.97
PT = 169,237.11 / 12 Months
PT = 14,103.09 per Month

The computation shows that you need Php14,103 per month to be able to survive. The amount is Php3,622 higher than the PSA estimated average. However, the amount does not account your family's transportation, education, and other non-food expenditures.

The verdict: Truth or Fiction?

In an individual's standpoint where he or she is providing for the family. The PSA's  estimated average amount is certainly not enough. Even the handicapped computation above is much higher than the estimate. On the other hand, PSA's estimate is based on statistics and surveys. The sampling will give diverse results ranging from low to high and from there they will get the average.

Below is the map cluster of how they categorized each region from Poorest to Least Poor.

Poverty Line Rating


References



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