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Published: Friday | November 25, 20112 Comments
McPherse Thompson, Assistant Editor - Business
The Planning Institute of Jamaica (PIOJ) has taken issue with the methodology used by the International Monetary Fund (IMF) to measure poverty in Jamaica, saying the use of income rather than consumption data was inferior and fraught with problems.
The IMF has suggested that Jamaica has the fourth-highest poverty rate at 43.1 per cent when compared with 23 regional neighbours, according to the latest Regional Economic Outlook report Western Hemisphere: Shifting Winds, New Policy Challenges.
But PIOJ Director General Dr Gladstone Hutchinson, reviewing Jamaica's economic performance at a briefing at the PIOJ's New Kingston offices on Wednesday, said the IMF's report uses the income-based methodology for the year 2002; while the PIOJ, which uses a consumption-based approach, puts the poverty rate for the comparative period at 19.7 per cent.
Hutchinson did not elaborate, but pointed to a technical note prepared earlier this month on alternative approaches to the measurement of poverty in Jamaica in which it said the IMF and the PIOJ used two different methodologies, two different poverty lines in two different time periods, and two different sources of data, and hence the rates produced were not comparable.
The PIOJ uses a consumption-based methodology to measure poverty. "The poverty lines used to determine the prevalence of poverty are per adult equivalent regional lines," the paper said.
The source of consumption data is the annual Jamaica Survey of Living Conditions household expenditure survey conducted by the Statistical Institute of Jamaica and its most recent figure is for 2010 when it reported a poverty rate of 17.6 per cent.
The PIOJ said the Jamaica Survey of Living Conditions (JSLC) was an early pioneer of the well-established World Bank methodology for the conduct of living standards measurement surveys.
"The JSLC is world renowned for its quality and is widely used for academic and policy research by both local and international researchers and policymakers," it said.
According to the PIOJ, the IMF estimate is derived from the World Bank's Socio-Economic Database for Latin America and the Caribbean, or SEDLAC, which relies on an income-based methodology to estimate poverty using a 2005 purchasing power parity-adjusted per capita reference poverty line of US$2.50 per day.
The source of income data is the annual Jamaica labour force survey and its most recent figure reported is for 2002.
Inferior and fraught
"The use of income rather than consumption data has long been critiqued as being inferior and fraught with problems such as non-reporting, under-reporting, missing and zero values and unreliable income," said PIOJ.
It said the case of zero values was particularly relevant to Jamaica. In addition, the use of the 2005 purchasing power parity-adjusted standard of US$2.50 has been critiqued as being simplistic as it did not allow for regional variations in price and localised consumption patterns, as well as variations in expenditure requirements based on sex and age since individuals of differing sex and age may require different caloric needs, and hence different expenditures.
"To account for, among other things, spatial comparability, survey reporting errors and age-sex biases, the Planning Institute of Jamaica has employed the use of consumption-based, regional per adult equivalent poverty lines," said the technical note.
"The use of these lines alleviates the problems associated with using income data and addresses the issues of regional variations in price and varying expenditure needs based on sex and age by using regional per adult equivalent poverty lines."
mcpherse.thompson@gleanerjm.com
McPherse Thompson, Assistant Editor - Business
The Planning Institute of Jamaica (PIOJ) has taken issue with the methodology used by the International Monetary Fund (IMF) to measure poverty in Jamaica, saying the use of income rather than consumption data was inferior and fraught with problems.
The IMF has suggested that Jamaica has the fourth-highest poverty rate at 43.1 per cent when compared with 23 regional neighbours, according to the latest Regional Economic Outlook report Western Hemisphere: Shifting Winds, New Policy Challenges.
But PIOJ Director General Dr Gladstone Hutchinson, reviewing Jamaica's economic performance at a briefing at the PIOJ's New Kingston offices on Wednesday, said the IMF's report uses the income-based methodology for the year 2002; while the PIOJ, which uses a consumption-based approach, puts the poverty rate for the comparative period at 19.7 per cent.
Hutchinson did not elaborate, but pointed to a technical note prepared earlier this month on alternative approaches to the measurement of poverty in Jamaica in which it said the IMF and the PIOJ used two different methodologies, two different poverty lines in two different time periods, and two different sources of data, and hence the rates produced were not comparable.
The PIOJ uses a consumption-based methodology to measure poverty. "The poverty lines used to determine the prevalence of poverty are per adult equivalent regional lines," the paper said.
The source of consumption data is the annual Jamaica Survey of Living Conditions household expenditure survey conducted by the Statistical Institute of Jamaica and its most recent figure is for 2010 when it reported a poverty rate of 17.6 per cent.
The PIOJ said the Jamaica Survey of Living Conditions (JSLC) was an early pioneer of the well-established World Bank methodology for the conduct of living standards measurement surveys.
"The JSLC is world renowned for its quality and is widely used for academic and policy research by both local and international researchers and policymakers," it said.
According to the PIOJ, the IMF estimate is derived from the World Bank's Socio-Economic Database for Latin America and the Caribbean, or SEDLAC, which relies on an income-based methodology to estimate poverty using a 2005 purchasing power parity-adjusted per capita reference poverty line of US$2.50 per day.
The source of income data is the annual Jamaica labour force survey and its most recent figure reported is for 2002.
Inferior and fraught
"The use of income rather than consumption data has long been critiqued as being inferior and fraught with problems such as non-reporting, under-reporting, missing and zero values and unreliable income," said PIOJ.
It said the case of zero values was particularly relevant to Jamaica. In addition, the use of the 2005 purchasing power parity-adjusted standard of US$2.50 has been critiqued as being simplistic as it did not allow for regional variations in price and localised consumption patterns, as well as variations in expenditure requirements based on sex and age since individuals of differing sex and age may require different caloric needs, and hence different expenditures.
"To account for, among other things, spatial comparability, survey reporting errors and age-sex biases, the Planning Institute of Jamaica has employed the use of consumption-based, regional per adult equivalent poverty lines," said the technical note.
"The use of these lines alleviates the problems associated with using income data and addresses the issues of regional variations in price and varying expenditure needs based on sex and age by using regional per adult equivalent poverty lines."
mcpherse.thompson@gleanerjm.com
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