Plugging the poverty gap

About one in 10 (10.9 percent, or 3 million) Filipino families were poor in 2023. A family is classified as poor when it earns less than a defined threshold income (“poverty line”) set by the Philippine Statistics Authority (PSA) in 2023 at P13,873 per month for a family of five. This poverty line is based on the minimum food and nonfood family expenditures a family should incur. Minimum food needs are determined by the Food and Nutrition Research Institute, and make up 70 percent of the budget, while the rest accounts for minimum requirements in clothing, housing, education, transport, and personal/medical care.

But poverty is not just about lack of income. The United Nations Development Programme offers a multidimensional poverty measure (index) that considers education and health status in addition to income. But for all its limitations, income poverty remains the primary basis for poverty assessment across the globe due to its ease of measurement.

The PSA also reports the shortfall between the actual incomes of the poor and the poverty line, i.e., how much additional income would be needed to take them out of poverty. The income gap (averaged across the total number of poor) and the poverty gap (averaged across all individuals or families) measure the depth or severity of poverty. Data on these from the triennial Family Income and Expenditures Survey showed the total income shortfall of all Filipino poor to have amounted to P71 billion in 2018. This gap rose to P95.1 billion in 2021, reflecting how the pandemic lockdowns killed jobs and immobilized livelihoods across the country, but went down again in 2023 to P82 billion.

Think of what this number means in light of current events. If we could find a way to give every poor Filipino family the exact additional income each of them needed to get out of poverty, then all it would have taken in 2023 was P82 billion—a mere fraction of the amounts now known to have been stolen by corrupt officials and contractors just from spurious flood control projects alone. But doing this cash distribution the right way would obviously entail administrative and logistics costs. A prerequisite would be a detailed database on poor Filipino families, to make it possible to identify every poor family and how much each of them needs to cease being poor. Our government’s track record on costs incurred to deliver assistance to the poor is not particularly inspiring. For example, a 2012 World Bank study I’ve mentioned before found that the government spent P7 for every P1 of assistance delivered to rice consumers under a past rice subsidy program (see “The utter folly of P20 rice,” 8/12/25).

It’s not just the cost of delivering assistance that is the issue, but also the improper targeting of it, with significant errors of inclusion (i.e., including those not needing it) and exclusion (excluding those who truly need it). Past studies by the Philippine Institute for Development Studies revealed instances where well over half (62-66 percent) of recipients of targeted assistance in the early 2000s were actually nonpoor, while undercoverage had been as high as 80 percent, i.e., only a fifth of the total target beneficiaries were assisted. Targeting has since improved, after the Department of Social Welfare and Development (DSWD) established the national household targeting system, also known as Listahanan, in 2009. It identifies who and where the poor are in the country and what they are like, and has undertaken three household surveys in 2009, 2015, and 2019. Listahanan has provided an objective basis for identifying deserving beneficiaries of the conditional cash transfer program, Pantawid Pamilyang Pilipino Program or 4Ps, the government’s flagship social protection program. Our 4Ps has proudly earned the distinction of being cited by the World Bank as one of the best targeted CCT programs in the world.

This is the kind of targeting we need if we are to minimize the costs of plugging the poverty gap, which may have declined further from P82 billion in 2023. In practice, the DSWD will still need a multiple of this amount (but hopefully much less than P7 for P1 of past notorious rice subsidy programs) to be effective on its social protection and poverty-fighting work. It should also cover the cost of leveling up from the now-outdated Listahanan to a dynamic social registry that tracks the Filipino poor even more closely and comprehensively. This can be built on the new community-based monitoring system database and civil registries administered by PSA and local government units.

This—and not politicians issuing “guarantee letters”—must be the basis for helping the Filipino poor out of their poverty. Our poor should not have to suffer the indignity of begging politicians for help for needs that an effective government could and should readily provide.