Seventy Four Lives to the Peso

Francisco Lara is Country Director of Voluntary Service Overseas Philippines (VSO-P). This article was published in the Opinion Section, Yellow Pad Column of BusinessWorld, February 13, 2006 edition, page S1/5.

Just before the ULTRA stampede happened, the news was dominated by Gloria Macapagal-Arroyo’s boast of the stronger peso being a sure sign of economic take off.  A few donor organizations, credit rating groups, and business clubs echoed the same line.

Then tragedy struck.

A ferocious stampede killed 74  people—ordinary Filipinos who had pinned their hopes for instant cash on a game show that offered generous prizes. The upbeat news on the strong peso was promptly overshadowed by the imagery of the injured, the dead and the dying, most of whom were poor, helpless, and disadvantaged women.

In an instant, the “good” economic news was drowned out, the reality of extreme poverty was exposed, and the feminization of poverty revealed.

Social scientists face a critical challenge. How do we assess poverty and disadvantage in the midst of conflicting economic events?  In the midst of economic incoherence, was there a basis for optimism or were government announcements mere propaganda?

Paradoxes are fairly common in economics, and more so in the Philippines. Surprisingly, The gross national product (GNP) in 2005 grew at a relatively high rate, without a corresponding increase in jobs or an expansion of livelihoods.  An enormous increase in overseas remittances was accompanied by a hollowing out of the economy as the share of manufacturing to GDP fell.  And finally, the peso’s strong buying power flew in the face  of the highest ever incidence of self-rated poverty nationwide.

In studying Philippine society, local pollsters have taken to getting regular assessments of self-rated poverty.  These are useful in measuring levels of public satisfaction with anti-poverty responses, or the lack of it, over time.  Such studies often come into conflict with official statistics—revealing critical inconsistencies that development planners seldom recognize.

One such study is referred to as Jodha’s Paradox, and it helps explain the recent seemingly contradicting events.  N.S. Jodha, an Indian economist, did household studies in several villages of Western Rajasthan and discovered that local villagers felt that they were better-off despite the fact that they had all encountered a decrease in per-capita annual incomes of more than five percent over a period of 20 years. People below the poverty line had also increased from 17 percent to 23 percent.

Jodha’s famous study demonstrated that poor and disadvantaged people had vastly different perceptions of well-being from those used by economists and statisticians. In the study, villagers felt better off if they were able to drink milk daily, purchase a pair of shoes for children going to school, or were able to retain surplus grain at the household level.

Conversely they felt worse off if they had to sell all of their produce after the harvest period, if they continued to reside in the land or yard of their patrons, and if they had to withdraw children from school at certain times in the year.

Jodha’s paradox resonates in the events surrounding the tragedy of the previous week, even though it does so in reverse.  Filipinos feel that they are worse off despite government claims that the peso’s purchasing power has improved and targeted anti-poverty programs are beginning to bear fruit.

As I said in my text message:  It’s not P51 to the dollar, but 74 lives to the peso that matters!

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