3 ways of looking at the income distribution of the Philippines -2006 updates

A.  Median incomes  

1.  Income distribution from 1960 to 2000 has remained stable, if not stagnant, using median income comparison.  Over four decades, from Vice President Macapagal to Vice President Macapagal Arroyo, the upper half of the income distribution earned 82 percent of total income while the lower half earned 18 percent.  This situation cannot be explained from the perspective of lopsided distribution of productive assets like land and other properties simply because there are no available statistics on capital ownership of families.  We can conjecture however that salaries and wages have remained low through the years.  

As of 2003, there appears to be an ‘encouraging’ 1 percent increase in the share of families in the lower 50 percent of the distribution.

Median Income and Income Distribution

Family Income

1961

2000

2003

Median income (x P1,000)

1

89

95

% Income Share of upper 50% families 

82.4

82.2

81.0

% Income Share of lower 50 % families

17.6

17.8

19.0

Source: National Statistics Office.  Website: http://www.census.gov.ph; Family Income and Expenditures publications.

As of 2006, we see a standstill relative to the 2003 distribution. 

Median Income and Income Distribution
Family Income 1961 2000 2003 2006
Median income (x P1,000) 1 90 95 111
% Income Share of upper 50% families  82.4 82.2 81.0 81.0
% Income Share of lower 50 % families 17.6 17.8 19.0 19.0
Source: National Statistics Office.  Website: http://www.census.gov.ph; Family Income and Expenditures publications.

 

B.  Incomes of Top 1% families 

 

2. In 1985, right before EDSA 1, the families in the top 1 percent (numbering about 100 thousand)  of the income distribution earned an aggregate income of PhP 31.4 billion.  This is nearly what the combined 3.15 million families (or 32 percent) in the lower brackets of the distribution earned, which amounted to PhP 31.3 billion.

3. In 2000, right before EDSA 2, the top 1 percent families (numbering about 150 thousand)  in the income distribution earned an aggregate income of PhP 251.2 billion.  This is nearly what the combined 5.8 million families (or 38 percent) in the lower brackets of the distribution earned, which amounted to PhP 249.6 billion.

4. In 2003, before the end of the first term of Mrs. Arroyo, the top 1 percent families (numbering about 165 thousand)  in the income distribution earned an aggregate income of PhP 235.0 billion (hard to imagine that this declined by 6.4 percent from 2000 but this is the official figure).  This is nearly what the combined 5.3 million families (or 32 percent) in the lower brackets of the distribution earned, which amounted to PhP 227.1 billion.

5. In 2006, before the last national elections, the top 1 percent families (numbering about 174 thousand)  in the income distribution earned an aggregate income of PhP 256.3 billion.  This is nearly what the combined 5.2 million families (or 30 percent) in the lower brackets of the distribution earned, which amounted to PhP 257.9 billion.

6. So 174 thousand ‘top 1 percent’ families earned the equivalent of what 5.2 million ‘bottom 30-percent’ families collectively earned in 2006.

7.  I am not sure if this is cause for relief or even success for the economic managers, using this measure.  The 1:30 ratio in 2006 was marginally better than the 1:32 ratio in 2003 and 1:38 ratio in 2000. 

C.  ABCDE Socio-economic classification

6.  Market/opinion researchers classify according through proxies of wealth/assets, rather than direct measure of income to segment the (consumer) market.

7.  From the 16 April 2007 release of Pulse Asia, its nationally-representative sample has seven (7) percent making up classes A, B, and C; sixty-seven (67) percent, class D; and twenty-five (25) percent, class E.  This breakdown has a sampling error of +/- 3 percent.  [Statistically speaking, classes ABC may be  4 to 10 percent of the population; class D, 64-70 percent; and class E, 22-28 percent.]

8.  While statistical rigor will not be as robust, we can apply the above Pulse Asia percentages to the income distribution and find out how much income these classes earned in 2003.

CLASS

Families

Cumulative Income

Average Income

Number

Share

Amount

Share

(x 1000)

%

 (x PhP 1 million)

%

(x PhP 1000)

ABC

1154

7

         722,645

30

626

D

11206

68

       1,556,915

64

139

E

4120

25

         157,690

6

38

Total

16480

100

       2,437,250

100

148

9. We also apply the above Pulse Asia percentages to the income distribution and find out how much income these classes earned in 2006.

CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) %  (x PhP 1 million) % (x PhP 1000)
ABC 1,218 7 871,770 29 716
D 11,834 68        1,923,907 64 162
E 4,351 25        210,427 7 48
Total 17,403 100 3,006,104 100 173

In summary, in 2006 –

the good news: the income distribution has not worsened.

the bad news: the income distribution in 2006 has remained essentially the same. 

Not worth a praise release from the powers-that-be…  

 

19 Comments

Filed under income distribution, market research/opinion surveys, Philippine development, statistics

Intractability of Poverty…Inequality must be dealt with

[The title is attributed to Secretary Joel Rocamora during the press conference today, 23 April 2013.] 

My two earlier posts on income distribution point to the obvious, – that income distribution appears to be set in concrete to the disadvantage of the non-rich.

—————————————————

Press Release

<http://www.nscb.gov.ph/pressreleases/2013/PR-201304-NS1-04_poverty.asp&gt;


Poverty incidence unchanged,
as of first semester 2012—NSCB
                           
Filipino Version
(NSCB-PR-201304-NS1-04, Posted23 April 2012)

The National Statistical Coordination Board (NSCB) releases its latest report today on the state of poverty in the country. The report— using data from the Family Income and Expenditure Survey (FIES) conducted by the National Statistics Office (NSO) last July 2012– measured poverty incidence or the proportion of people below the poverty line to the total population.

In a press briefing, NSCB Secretary General Jose Ramon G. Albert reports that poverty incidence among population was estimated at 27.9 percent during the first semester of 2012.  Comparing this with the 2006 and 2009 first semester figures estimated at 28.8 percent and 28.6 percent, respectively, poverty remained unchanged as the computed differences are not statistically significant.

Food and poverty thresholds

The report points out that during the first semester of 2012, a Filipino family of five needed PhP 5,458 to meet basic food needs every month and Php 7,821 to stay above the poverty threshold (basic food and non-food needs) every month. These respective amounts represent the food and poverty thresholds, which increased by 11.1 percent from the first semester of 2009 to the first half of 2012, compared to the 26.0 percent-increase between the 1st semesters of 2006 and 2009.  

The food threshold is the minimum income required by an individual to meet his/her basic food needs and satisfy the nutritional requirements set by the Food and Nutrition Research Institute (FNRI), while remaining economically and socially productive. Put another way, the food threshold helps measure food poverty or “subsistence,” which may also be described as extreme poverty.

Poverty threshold is a similar concept, but incorporates basic non-food needs, such as clothing, housing, transportation, health, and education expenses, among others.

Poverty among Filipino families

The NSCB also releases statistics on poverty among families—a crucial social indicator that guides policy makers in their efforts to alleviate poverty.

According to the report, the subsistence incidence, which represents the proportion of Filipino families in extreme poverty, was estimated at 10.0 percent during the first semester of 2012. At 10.0 percent in the first semester of 2009 and 10.8 percent in the first half of 2006, the differences among these three figures remain statistically insignificant.

In terms of poverty incidence among families, the NSCB estimates a rate of 22.3 percent during the first semester of 2012, and 23.4 percent and 22.9 percent during the same periods in 2006 and 2009, respectively.

Estimated cost of eradicating poverty

The NSCB also releases other poverty-related statistics, such as the income gap. This measures the amount of income required by the poor in order to get out of poverty, in relation to the poverty threshold itself. This may be used as a hypothetical benchmark for the amount needed to eradicate poverty as a whole, assuming expenses are focused solely on assistance rather than on targeting costs (such as operations and implementation). 

In other words, using figures for the income gap and the poverty threshold, the NSCB estimates the total cost of poverty eradication (exclusive of targeting costs) is Php 79.7 billion for the first semester of 2012. It should be noted that the budget of the Department of Social Welfare and Development (DSWD) for the CCT was Php 39.4 billion for the entirety of 2012.

More frequent release of poverty statistics

The release of the latest official poverty statistics is a remarkable milestone for the country. In previous years, official poverty statistics were only released every three years, and usually with a one-year time lag from the year when the FIES data was first collected. However, starting this year, poverty statistics will be available in two series for every year in which the FIES is conducted—once, for the first semester and secondly, for the entire year.

In August 2012, Director General Arsenio Balisacan of the National Economic and Development Authority (NEDA) suggested to the NSCB and the NSO to examine FIES data for the first semester of 2012 and release it as quickly as possible. This is consistent with earlier efforts and discussions of the TC PovStat and the NSCB to respond to the growing need for more frequent and timely poverty statistics.

Albert says that the NSCB—along with partner institutions such as the NSO, the Bureau of Agricultural Statistics (BAS) and the members of the TC PovStat – ramped up the estimation and publication schedule to make this possible, while ensuring data quality and accuracy.

He hopes that, through this initiative , the Philippine Statistical System, particularly the NSCB, will be able to deliver a clearer, more relevant and more up-to-date snapshot of poverty in the Philippines to help policymakers and stakeholders alike (from both the public and private sectors) craft informed programs and policies based on timely and accurate statistics. 

<http://www.nscb.gov.ph/pressreleases/2013/PR-201304-NS1-04_poverty.asp&gt;

Leave a comment

Filed under income distribution, Philippine development, Philippines, statistics

VERified and NSO Certiicates

Did you receive a certificate of no record from the NSO?

Do you need to apply for late registration?

Do you have errors in your NSO certificate?

 

Do you have the time to personally attend to these matters?

 

Vital Event Records Certified, Inc. (VERified) launched a professional service to help you with these NSO documents.    They offer reasonably-valued packages handling problem cases involving birth certificates and other documents of vital events like marriage and death.  The door-to-door service is now available to residents of Metro Manila and nearby provinces, even if their original records were registered in other cities and municipalities in the country,

 

 

Because of VERified’s expertise, experience and network in civil registration, law, and business process engineering, clients save a lot of time and effort in going through the process and requirements of the bureaucracy.

 

 

This will benefit individuals who don’t have the luxury of time and the patience to go through long processes to personally fix issues with their NSO documents.

 

Interested parties can consult a VERified counselor for assessment of problems with birth, marriage and death certificates as well as related court decrees and legal instruments during weekdays every afternoon from 1:30 to 4:00.   For appointments, please get in touch with Rachelle Lalangan at (632) 7051265 or (632) 7051277.

2 Comments

Filed under civil registration, Philippines, visa applications

2012 in review

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

600 people reached the top of Mt. Everest in 2012. This blog got about 12,000 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 20 years to get that many views.

Click here to see the complete report.

Leave a comment

Filed under Uncategorized

Why has family income distribution remained unchanged for the past half-century?

Finally I found a source to explain this most unfortunate situation in the Philippines.  I have simply excerpted from the column ‘There’s the Rub’ by Conrado de Quiros entitled ‘Dagdag-bawas’ in the Philippine Daily Inquirer today, Tuesday, October 2nd, 2012.  And he was writing about the senatorial line-ups for the May 2013 elections.  <http://opinion.inquirer.net/37944/dagdag-bawas&gt;

xxxxx

I saw these things and realized that there is only one constant in our politics, or history. That is the incredible capacity of the elite, political and social, to survive. That is the incredible capacity of the elite to mend their differences, however those differences seem stark at one point, and find a new lease on life. That is the incredible capacity of the elite to come together and build a united front against a common enemy, which is change. (highlighting mine)

It was so then, it is so now.

xxxxx

Leave a comment

Filed under election, income distribution, Philippines, statistics

Marriages in the Philippines on the decline?

[Note: It is Valentine’s month but love could not be found in Congress and the Supreme Court.  It is good that talk of grace abounds at  Malacanang.  Here are some statistics from the National Statistics Office compiled by birth and marriage certificates registered at Civil Registry Offices all over the Philippines.  While there may be some month-to-month delay in registration, trends of these events can be established over longer periods of time. Please pardon how the tables appear in this blog.]  

  • Registered marriages decreasing

Marriages are generally registered on time.  So the title may be generalized to mean that really marriages are on the decline.

1. From 1995-2008, there were more year-to-year declines than increases, seven of them – with five declines coming in the last five years.  From 2003 to 2008, there have been more than 100 thousand less marriages.

Registered Marriages

Year

Number

% Growth

1995

503,650

1996

525,564

4.35

1997

562,808

7.09

1998

549,265

-2.41

1999

551,445

0.40

2000

577,387

4.70

2001

559,162

-3.16

2002

583,167

4.29

2003

593,553

1.78

2004

582,281

-1.90

2005

518,595

-10.94

2006

492,666

-5.00

2007

490,054

-0.53

2008

486,514

-0.72


  • June no longer among the top marrying months

Timing of bridal supplements of magazines, bridal fairs, honeymoon offers may have to be offered at some other time. Are these months the vacationing periods of our balikbayans/OFWs?

2. The top four months with most marriages [top 3] occurred in May, January, December, and April.

Distribution of Registered Marriages, by Month

Year

1995

1996

1997

1998

1999

2000

2001

Total

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

January

12.4%

12.0%

11.7%

12.7%

10.8%

10.9%

11.0%

February

6.7%

6.6%

7.4%

7.8%

6.8%

7.8%

8.7%

March

9.2%

8.1%

7.3%

9.2%

7.6%

8.2%

9.4%

April

9.7%

8.9%

10.3%

10.3%

9.1%

8.6%

10.0%

May

11.2%

11.3%

11.4%

10.9%

11.4%

11.4%

11.4%

June

9.8%

10.2%

9.9%

9.2%

9.7%

9.6%

9.3%

July

6.6%

6.6%

6.7%

6.2%

6.6%

6.8%

6.2%

August

4.8%

5.5%

5.2%

5.2%

5.4%

5.7%

5.1%

September

6.7%

7.5%

6.9%

6.5%

7.5%

7.2%

7.0%

October

7.0%

7.5%

7.2%

6.6%

7.6%

7.3%

7.0%

November

5.5%

5.6%

5.8%

5.1%

5.7%

5.5%

4.9%

December

10.4%

10.2%

10.3%

10.2%

11.8%

10.9%

9.9%

Year

2002

2003

2004

2005

2006

2007

2008

Total

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

January

12.2%

12.0%

11.6%

10.4%

9.6%

8.7%

9.0%

February

10.1%

9.6%

10.1%

7.8%

7.5%

7.9%

7.3%

March

8.0%

9.7%

10.2%

6.8%

7.4%

7.9%

6.2%

April

12.3%

9.8%

11.6%

10.2%

8.5%

9.3%

8.8%

May

13.4%

12.9%

11.5%

10.9%

10.3%

9.4%

9.9%

June

11.5%

11.0%

9.3%

9.2%

8.6%

7.6%

8.1%

July

7.2%

7.4%

6.4%

6.0%

5.8%

5.3%

5.8%

August

6.2%

6.1%

5.1%

5.0%

4.8%

4.3%

5.4%

September

8.2%

7.7%

6.4%

6.1%

6.0%

5.7%

5.8%

October

8.2%

8.1%

6.7%

6.9%

6.3%

5.8%

6.5%

November

6.3%

6.5%

4.9%

4.9%

4.8%

4.1%

4.7%

December

12.3%

12.1%

9.7%

10.2%

9.7%

8.9%

9.6%


  • More civil marriages now than church weddings

Are church weddings becoming too expensive?  Do more and more couples think weddings are passé?

3. Since 2002, the share of civil ceremonies has outpaced Catholic weddings.

% Distribution of Registered Marriages, by Type of Ceremony, by Year

 

Total

Year/Ceremony

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Roman Catholic

42.4

41.5

39.4

38.3

37.1

36.4

38.1

37.7

36.6

36.3

Civil ceremony

35.2

36.8

38.8

39.3

41.3

47.4

42.6

43.5

41.7

41.0

Other religious rites

22.1

21.5

21.6

22.2

21.3

15.5

17.1

17.9

20.6

21.3

Year-on-year % Changes of Registered Marriages, by Type of Ceremony

 

Total

Year/ Ceremony

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Total

4.7

-3.2

4.3

1.8

-1.9

-10.9

-5.0

-0.5

-0.7

Roman Catholic

2.5

-8.0

1.4

-1.3

-3.7

-7.0

-6.0

-3.3

-1.8

Civil ceremony

9.5

2.2

5.6

6.8

12.8

-20.0

-3.0

-4.8

-2.2

Other religious rites

2.1

-2.7

7.4

-2.5

-28.8

-1.6

-0.5

14.2

2.9


  • Illegitimate births rising

The stigma of being born out of wedlock may have worn off.  The next point of reckoning would be when the issue of inheritance comes up later in life.

4.  The number and share of illegitimate births to total registered births have increased during the period from 2007-2009. And births declined in 2009?  Let us see if this holds out in the next few years.

Registered Births, by Legitimacy, 2007-2009

Year

Total

% Growth Legitimate % Share Illegitimate % Share

2007

1,749,878

1,155,044

66.0

594,744

34.0

2008

1,784,316

1.97

1,115,475

62.5

668,841

37.5

2009

1,745,585

-2.17

1,034,506

59.3

711,079

40.7

Leave a comment

Filed under civil registration, Philippines, population

Pinoys Look at P-Noy’s Porsche and Are Dissatisfied?

Malacanang occupants should remember the voting percentages for P-Noy in the May 2010 elections (see Table 1 below).  Maybe for 12-18 months these would be the core BSA3 support for key contentious issues.  These would be the groups which will give him the benefit of the doubt and take his side for some time.

Table 1. VOTE FOR PRESIDENT, BY CLASS (%)

TOTAL RP

ABC

D

E

AQUINO BENIGNO SIMEON III C. ‘NOYNOY’

44

48

44

36

Estrada Ejercito, Joseph M. ‘Erap’

25

19

27

32

Villar, Manuel Jr. B. ‘Manny’

13

11

14

16

Teodoro Gilberto Jr. C. ‘Gibo’

11

14

8

9

Villanueva Eduardo C. ‘Bro. Eddie’

3

4

3

3

Gordon Richard J. ‘Dick’

2

2

1

2

Acosta Vetellano S. ‘Dodong’

1

1

1

1

Madrigal Jamby A. S. ‘Jamby’

0.2

0.2

0.2

0.1

De Los Reyes John Carlos G. ‘Jc’

0.2

0.3

0.1

0.1

Perlas Jesus Nicanor P. ‘Nick’

0.1

0.1

0.1

0.2

Can’t Answer/Refused

1

1

1

1

Source: SWS May 2010 Elections Exit Poll

48 percent of ABC voters chose Aquino; D voters, 44 percent, and E voters, 36 percent.

Porsche Issue

I had written Mahar Mangahas on the Porsche issue and how this was picked by media to bear down on the decline of P-Noy’s satisfaction ratings.  The text of my letter is as follows:

———————————————————————–

Hi Mahar.

P-Noy’s ratings fell significantly for a new President, if we are to compare him with the others starting with his mother’s term.

Probably there are many other reasons but the SWS press release seems to attribute this solely to his Porsche purchase.

The statement posed to respondents was for me not neutrally phrased (kind of leading), a la Serge Osmena’s style of phrasing for his messaging strategy:

‘Pres. Aquino’s purchase of an expensive car such as a Porsche, even if through his own money, is not a good example for a President of a country like the Philippines.’

I would think that it would be difficult to disagree with such statement.

It is interesting that 1 out of  5, specifically the D and E classes, was undecided, did not want to take a position, or unsure of what the question/statement meant or wanted to elicit.

My opinion.  Please correct me if I am wrong, subject to availability of your time.

——————————————————————————

Mahar replied back:

——————————————————————————

Dear Butch,

…..
We put the Porsche item in the press release since it’s the only other survey item directly about PNoy that is open to report; we just didn’t want to devote a separate press release to the Porsche matter alone.  We could not have selected the Porsche item as “the cause” of anything, since there was nothing else to select.

Since all “agree-disagree” statements are vulnerable to affirmation bias, a question designer has to consciously choose what position is to be affirmed.  It is our practice to choose the “common sense” or orthodox position, which in this case is that buying such an expensive car does not set a good example.

Suppose we had used the reverse statement that “there is nothing wrong with PNoy’s buying the Porsche since anyway it’s his own money”?  To have done it that (unorthodox) way would have risked criticism for being too soft on PNoy, rather than neutral.

—————————————————————————

I defer to the long experience of SWS on these surveys, including how it designs questions,

But let us focus on the message, not the messenger.

Net Ratings

A positive net rating indicates that the respondents agree that it is not a good example that P-Noy has set by buying a Porsche, even with his own money.

A negative net rating could mean that it is a good example?  Perhaps it would be more appropriate to interpret this in the way that Malacanang does.  That this is a personal matter.  That the President is entitled to some leisure time and can use his free time to unwind in the way he wants to, like driving fast cars or practice shooting at the range.  That he did not use government funds. I wonder if this would be akin to playing golf by FVR and GMA.

But it is only in the ABC class where we observe this negative rating (-2).  The D (+17) and E (+15) respondents have positive net ratings.  Has the message from Malacanang only catered or made sense to the ABC class?  Note that the D and E classes have little access to leisure time, access and opportunity.

According to the Family Income and Expenditures Survey of the National Statistics Office, Filipino families in 2009 spent a measly 0.4 percent of their income for recreation.  Also, the average income of the top 1 percent of the income distribution was less than Php 1.9 million.

So it is still somewhat positive that a third of the D (33 percent) and E (31 percent) took the side of Malacanang, as did 48 percent of class ABC.

Going back to P-Noy’s voters last May 2011, it is interesting that 48 percent of class ABC supported him.  This is the same percentage that sided with him in the Porsche issue; there is only a small percentage (6) that was undecided.  Of course it would be too presumptuous to think that the same 48 percent who voted for him are the same 48 percent who sided with him here.  But the conclusion is that this core among the ABC has not been eroded, nor added to.

This is not the case with voter percentages for the D and E classes versus those favorable to the ‘Porsche’ issue. For D, it is 44 vs. 33; and for E, 36 vs.31.  Note also the significant percentages of the undecided, 18 percent for D and 24 percent for E.  Malacanang should sharpen its focus of their messaging to the D and E groups, especially the ‘undecideds’, to keep at least his voters loyal to him.

This is of course a conservative way of targeting their constituency, at least in this Porsche issue or anything related to this genre.  Otherwise it would be the sentiments of Juana Change that would offer the more compelling argument/s, as it seemed.

Well, back to the title, I am unsure if the correlation between the purchase of the Porsche and the decline in P-Noy’s ratings is significant.  As Mahar had written and let me reiterate, ‘We put the Porsche item in the press release since it’s the only other survey item directly about PNoy that is open to report; we just didn’t want to devote a separate press release to the Porsche matter alone.  We could not have selected the Porsche item as “the cause” of anything, since there was nothing else to select’.

Leave a comment

Filed under exit polls, market research/opinion surveys, Philippines, statistics

Family Income Distribution in the Philippines, 1985-2009: Essentially the Same

0.  From the following data and discussion we may be able to form conclusions on whether the distribution of income has become more equitable/equal over the past five (5) decades.   With percentile data, I will present different ways of grouping families according to income obtained from the Family Income and Expenditures (FIES) surveys, the latest of which is for 2009.  I will divide the distribution at the median; look at the top one (1) percent families; examine the coefficients of variation (CVs) at the percentiles; compare Gini coefficients; and, even though lacking in statistical rigor, impose the socio-economic classification of classes A, B, C, D and E on the percentile distribution.
A.  Median incomes

1.  The median income from 1961 to 2009, nearly half a century, splits the upper 50 percent with an 80 percent share of income and the lower half, with 20 percent.

As of 2009, the distribution appears to be the same at the end of Martial Law days.

Table 1.  Median Income and Income Distribution, 1961 – 2009
Family Income 1961 1985 2000 2003 2006 2009
Median income (x P1,000) 1 20 89 95 111 135
% Income Share of upper 50% families 82 80 82 81 81 80
% Income Share of lower 50 % families 18 20 18 19 19 20
Source: National Statistics Office.  Website: http://www.census.gov.ph; Family Income and Expenditures publications; Unpublished percentile data on incomes.

B.  Incomes of Top 1% families

2. In 1985, right before EDSA 1, the families in the top 1 percent (numbering about 100 thousand) of the income distribution earned an aggregate income of PhP 31.4 billion.  This is nearly what the combined 3.15 million families (or 32 percent) in the lower brackets of the distribution earned, which amounted to PhP 31.3 billion.

3. In 2000, right before EDSA 2, the top 1 percent families (numbering about 150 thousand) in the income distribution earned an aggregate income of PhP 251.2 billion.  This is nearly what the combined 5.8 million families (or 38 percent) in the lower brackets of the distribution earned, which amounted to PhP 249.6 billion.

4. In 2003, before the end of the first term of Mrs. Arroyo, the top 1 percent families (numbering about 165 thousand) in the income distribution earned an aggregate income of PhP 235.0 billion (hard to imagine that this declined by 6.4 percent from 2000 but this is the official figure).  This is nearly what the combined 5.3 million families (or 32 percent) in the lower brackets of the distribution earned, which amounted to PhP 227.1 billion.

5. In 2006, before the national elections, the top 1 percent families (numbering about 174 thousand) in the income distribution earned an aggregate income of PhP 256.3 billion.  This is nearly what the combined 5.2 million families (or 30 percent) in the lower brackets of the distribution earned, which amounted to PhP 257.9 billion.

6. In 2009, before the last national elections, some 185 thousand ‘top 1 percent’ families earned the equivalent of what 5.5 million ‘bottom 30-percent’ families collectively earned.

7. The 1:30 ratio in 2009 remained, or stabilized, at the same ratio in 2006.

Table 2.  Top 1% Families and Bottom % Families – Income Comparison
1985 2000 2003 2006 2009
Number of Top 1% Families (x1000) 100 150 165 174 185
with
Aggregate Income (PhP billion) 31.4 251.2 235 256.3 342.7
Equivalent to
Number of Families (in millions) 3.15 5.8 5.3 5.2 5.5
% of Total 32% 38% 32% 30% 30%
with
Aggregate Income (PhP billion) 31.3 249.6 227.1 257.9 343
Source: National Statistics Office.  Unpublished percentile data on incomes.

These results raise even more concern when one looks at the top individual taxpayers of 2009 released by the Bureau of Internal Revenue (BIR) in accordance with Section 71 of the National Internal Revenue Code of 1997.  These individuals may not have been covered by the survey as their transactions would be categorized in statistical parlance as ‘rare events’ and thus would have little chance or probability of being selected as samples.

Table 3. BIR Top Individual Taxpayers 2009
Rank Taxpayer Tax Due
1 Elaine B. Gardiola P59.54 million
2 Wilfredo B. Revillame P57.25-million
3 Ronaldo R. Soliman P36.70 million
4 Ramon S. Ang P26.44 million
5 Oscar M. Lopez P25.70 million
66 Henry Sy, Sr P25.18 million
7 Carlos D.C. Ejercito P25.02 million
8 Bonifacio D. Gumboc, Jr P24.74 million
9 Ma. Teresa Caridad P. Gallego P24.45 million
10 Felipe L. Gozon P22.20 million
500 Hitoshi Goto P 3.57 million

Thus this is evidence that the families in the top 1 percent in the income distribution would be under-represented in the survey.  And these should have a higher income share, than is reflected in the FIES, and would further skew the distribution.

C. Coefficients of Variation of the Percentiles

7.  The coefficient of variation (CV) is the standard error expressed in terms of the arithmetic mean (average).  It is a measure of dispersion, a measure of disparity.  The coefficient of variation is useful because the standard deviation of data can be better understood in the context of the arithmetic mean of the data.  The following graphs chart out the CVs of income percentile data obtained from the NSO over many years.

8.  There are no significant changes aside from those at the tails, both at the lowest and highest ends.  The general outlook of the distribution is that of a ‘flat-liner’, bereft of activity showing change.  The family incomes are clustered closely together.  In 2009, eighty-nine (89) 0f the 100 percentile CVs were no greater than 0.1 percent.[2]

Table 4. Distribution of Percentile CVs, 2009
CV (in %) Frequency
0.01 -0.1 89
0.11 – 0.2 6
0.21 – 0.3 2
0.31 – 0.4
0.41 – 0.5 1
0.51 – 0.6
0.61 – 0.7
0.71 – 0.7
0.81 – 0.9
0.91 – 1.0 1
1.01 + 1

Groupings based on a cut-off, for instance, a point/line representing the poverty threshold imposed on these charts would appear to be insufficient.  Income alone would not be a valid indicator of poverty classification because of the observed ‘homogeneity’ of incomes.

D. Gini Cofficient

9.  The Gini coefficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1 maximal inequality.  The Gini coefficient is usually defined mathematically based on the Lorenz curve, which plots the proportion of the total income of the population (y axis) that is cumulatively earned by the bottom x% of the population.

10.  However, a low coefficient does not always mean an ideal condition.  It could be that many incomes are similar (either low or high).  In the Philippine example the acknowledged ‘income-poor’ Autonomous Region of Muslim Mindanao has the lowest coefficient followed by the ‘richer’ regions, such as the National Capital Region (NCR) and Central Luzon (Region III).

11. The ARMM had the lowest Gini ratio while Regions 8, 9 and 10 had the highest ratios.

Table 5. Gini ratios, 2009
Region Ratio
A R M M 0.2948
REGION III 0.3727
N C R 0.3953
REGION IV B 0.4004
REGION IV A 0.4063
REGION I 0.4086
REGION V 0.4164
REGION VI 0.4197
C A R 0.4212
REGION XI 0.4275
REGION II 0.4425
REGION XII 0.4425
Caraga 0.4595
REGION VII 0.4601
REGION X 0.4737
REGION IX 0.4738
REGION VIII 0.4841

Table 6. Gini ratios, 2006
Region Ratio
A R M M 0.3113
REGION I 0.3953
N C R 0.3988
REGION III 0.3994
REGION XII 0.4006
REGION IV A 0.4082
REGION IV B 0.4106
REGION II 0.4216
REGION XI 0.4225
REGION VI 0.4326
C A R 0.4418
REGION V 0.4428
Caraga 0.4452
REGION VII 0.4639
REGION X 0.4806
REGION VIII 0.4828
REGION IX 0.5054


11.  Nevertheless, the movement of the coefficient at the national level showed an indication of more equality or less inequality over the years, with the highest being in 1997 and 2000.

Table 7. Gini Coefficient, Philippines
Year Coefficient
1 1985 0.4466
2 1988 0.4446
3 1991 0.468
4 1994 0.4507
5 1997 0.4872
6 2000 0.4822
7 2003 0.4605
8 2006 0.458
9 2009 0.4484

12.  Of 135 countries and dependencies listed in the World Fact Book of the Central Intelligence Asia (CIA), the following rankings can be obtained.  It is clear that the Gini ratio is not always reflective of state of a country’s development[3].

Table 8. Countries with the lowest Gini Ratios
Country Gini ratio Reference Year
Sweden 23 2005
Norway 25 2008
Austria 26 2007
Czech Republic 26 2005
Luxembourg 26 2005
Malta 26 2007
Serbia 26 2008
Slovakia 26 2005
Albania 26.7 2005
Germany 27 2006


Table 9. Countries with the Highest Gini Ratios
Country Gini ratio Reference Year
Brazil 56.7 2005
Colombia 58.5 2008
Bolivia 59.2 2006
Haiti 59.2 2001
Central African Republic 61.3 1993
Sierra Leone 62.9 1989
Botswana 63 1993
Lesotho 63.2 1995
South Africa 65 2005
Namibia 70.7 2003

13.  Among the Association of Southeast Asian Nations (ASEAN), it was Laos with the lowest Gini, and Singapore with the highest..


Table 10. ASEAN Countries’ Gini Ratios
Country Gini ratio Reference Year
Laos 34.6 2002
Vietnam 37 2004
Indonesia 39.4 2005
Cambodia 43 2007 est.
Thailand 43 2006
Philippines 45.8 2006
Malaysia 46.1 2002
Singapore 48.1 2008
Myanmar N/A N/A

E.  ABCDE Socio-economic classification

14.  Market/opinion researchers classify according through proxies of wealth/assets, aside from measure of income to segment the (consumer) market.  These proxies may include conditions in the community where the residence of the respondent is, the types of materials used for the house, household furnishings, ownership of house and/or lot.

15.  From the 16 April 2007 release of Pulse Asia, its nationally-representative sample has seven (7) percent making up classes A, B, and C; sixty-seven (67) percent, class D; and twenty-five (25) percent, class E.  This breakdown has a sampling error of +/- 3 percent.  [Statistically speaking, classes ABC may be 4 to 10 percent of the population; class D, 64-70 percent; and class E, 22-28 percent.]

16.  In 2010, the breakdown became: 9 percent for class ABC; 62 percent for class D; and 29 percent for class E.  Class ABC can be further subdivided into class AB, 0.3 percent, and class C, 8.6 percent, although Pulse Asia estimates an undercount of class AB.

.

Table 11: Percent Distribution of Families, by Socio-Economic Class
Socio Economic Class Percent Share of Families to Total
2007 2010 My guess-timate*
ABC 7 9 10
of which: AB n.a. 0.3** 1
C n.a. 8.6 9
D 68 62 60
E 25 29 30
Source: Pulse Asia, in consultation with Dr. Ana Tabunda 

Note: * – Rounded off but within +/- 3% standard errors of 2010 figures

** -Undercounted due to refusals of AB respondents

.

17   While statistical rigor will not be as robust, we can apply the above percentages [my guess-timates] to the income distribution and find out how much income these classes earned in during the reference years.

Table 12. Percent Distribution of Families and Incomes, by Socio-Economic Class, 1985
CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) % (x PhP 1 million) % (x PhP 1000)
ABC 985 10 111,420 36 113
D 5,908 60 165,857 54 28
E 2,954 30 28,498 9 10
Total 9847 100 305,775 100 31
Table 13. Percent Distribution of Families and Incomes, by Socio-Economic Class, 2000
CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) % (x PhP 1 million) % (x PhP 1000)
ABC 1,507 10 838,445 38 556
D 9,043 60 1,174,919 54 130
E 4,522 30 173,886 8 38
Total 15072 100 2,187,250 100 145
Table 14. Percent Distribution of Families and Incomes, by Socio-Economic Class, 2003
CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) % (x PhP 1 million) % (x PhP 1000)
ABC 1,648 10 884,478 36 537
D 9,888 60 1,346,581 55 136
E 4,944 30 206,191 8 42
Total 16480 100 2,437,250 100 148
Table 15. Percent Distribution of Families and Incomes, by Socio-Economic Class, 2006
CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) % (x PhP 1 million) % (x PhP 1000)
ABC 1,740 10 1,082,478 36 622
D 10,442 60 1,669,309 56 160
E 5,221 30 254,316 8 49
Total 17,403 100 3,006,104 100 173
Table 16. Percent Distribution of Families and Incomes, by Socio-Economic Class, 2009
CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) % (x PhP 1 million) % (x PhP 1000)
ABC 1,845 10 1,343,697 35 728
D 11,071 60 2,117,478 56 191
E 5,536 30 343,150 9 62
Total 18,452 100 3,804,325 100 206

18.  When class ABC is further subdivided into class AB and class C, it becomes apparent that class AB could be the top 1 percent, with an income share equal to that of class E.

Table 16-A. Percent Distribution of Families and Incomes, by Modified Socio-Economic Class, 2009
CLASS Families Cumulative Income Average Income
Number Share Amount Share
(x 1000) % (x PhP 1 million) % (x PhP 1000)
AB 185 1 342,736 9 1,857
C 1,661 9 1,000,960 26 603
D 11,071 60 2,117,478 56 191
E 5,536 30 343,150 9 62
Total 18,452 100 3,804,325 100 206

19. In summary, the shares of income of class ABC ranged from 35-38, class D, from 54-56, and class E, from 8-9 percent during the past, nearly a quarter-century, period from 1985-2009.

20.  The good news is that the income distribution has not worsened.  The bad news is that it has remained essentially the same..

G.  Summary

21.  From the following data and discussion we can surmise that development efforts for the past five (5) decades have failed to effect an equitable/equal distribution of income.

  • The median split has been at 82:18 to 80:20 in favor of the families at upper fifty (50) percent over the past fifty (50) years.
  • The top one (1) percent families earned income equivalent to income earned by 32 percent of the families at the bottom of the income ladder in 1985.  This peaked to 38 percent in 2000, was replicated in 2003, and moved down to 30 percent in 2006 and 2009.  In twenty-five (25) years the top 1 percent gave up two (2) percent to the families at the bottom rungs.
  • The CVs show very little variation at the percentiles except those at the extreme ends, indicating little spread of income across the entire distribution.
  • The Gini coefficient, with its measure of inequality subject to misinterpretation, had moved up during the ‘Baht’ financial crisis, and down from then on.  The Gini ratio of the Philippines is neither among the highest nor the lowest in the world, including ASEAN.
  • The shares of income of class ABC ranged from 35-38, class D, from 54-56, and class E, from 8-9 percent the past twenty-five (25) years from 1985-2009

22.  There is also utter lack of information on the distribution of family income which the government, particularly the National Statistics Office (NSO) and the statistical system, need to address.  Perhaps one of the reasons why the distribution has generally remained unchanged is because even if many think that this is so, there has been insufficient empirical evidence to establish its extent and chronicity.

23.  I also urge the government to come up with an official definition of the often-used ABCDE socio-economic classification and the ‘generic’ low-middle-high income classes.   in cooperation with the academe and private sector.  These are terms that many policy and decision-makers and the general public have come to accept and use rather than deciles, quintiles and percentiles and the government can respond by standardizing these and help improve the statistical literacy of society, in this case on income distribution.


[2] On the basis of this observation, a review of the sampling scheme may be valid since it appears that the sampling size can be reduced with the very low CVs; this may be the case of surveying ‘more of the same’.  The soundness of sub-national results may also be evaluated by examining relevant CVs at the percentiles/ /quintiles/deciles.  The FIES questionnaire should also be reviewed in this light; it has 950 items, with 234 on income, 677 on expenditures and others, 39.

[3] It has been pointed out that Gini coefficients can be computed using income or expenditure /consumption data and this should be considered when comparing country coefficients.

23 Comments

Filed under income distribution, Philippine development, Philippines, statistics