The costs and benefits of Pantawid Pamilya

THOUGHT LEADERS

The costs and benefits of Pantawid Pamilya

There is growing evidence showing positive outcomes for the government's conditional cash
transfer

The Pantawid Pamilyang Pilipino Program (4Ps), the governments conditional cash transfer
(CCT), has come into scrutiny by legislators with significant resources proposed for it next year.
From P4 million in 2007 to support 6,000 households, the 2014 budget was P62.6 billion to
assist 4 million households, and will even grow next year with the extension of support to
children in high school.

According to the World Bank staff, Pantawid has become the third largest CCT program globally,
next only to Brazil (8.8 million households) and Mexico (6.5 million households). The CCT
should certainly be scrutinized, and so with every program involving public funds: everyone
should ask about the value of each peso spent in government programs and projects.

In a previous article, I pointed out that poverty incidence has not changed, even with the CCT,
but not to the fault of Pantawid since all things have not been equal. Climate disasters and other
factors put nearly-poor households at risk of falling into poverty. At a Department of Social
Welfare and Development (DSWD) forum held last November 17, it was suggested that poverty
would have further worsened without Pantawid. Using data from the 2013 Annual Poverty
Indicator Survey (APIS), conducted by the Philippine Statistics Authority (PSA), the poverty rate
(of 25%) could be as much 26.4% without Pantawid. Even the extreme poverty rate (of 11.1%),
the proportion of Pinoys whose income is less than needs for food, would be 1.4 percentage
points higher without Pantawid (12.5%) in place.

National Among Pantawid Beneficiaries

Without Pantawid With Pantawid Without Pantawid With Pantawid
Poverty Rate 26.4% 25.0% 64.5% 58.1%
Extreme Poverty Rate 12.5% 11.1% 35.3% 28.7%

Note: Estimates generated by World Bank Staff using data from national household surveys
conducted by PSA, as presented in DSWD forum on Pantawid Pamilya 2nd Wave Impact
Evaluation, Nov 14, 2014.

Among CCT beneficiaries, the increase in poverty rate without Pantawid is even higher.
The costs and benefits of Pantawid Pamilya
Poverty among beneficiaries (at 58.1%) would be 6.4 percentage points higher (64.5%) without
the CCT. Doesnt this suggest that some CCT households are not poor? Certainly, but
independent evaluation by the Social Weather Stations shows that most of these non-poor
beneficiaries are nearly-poor.

It must be understood that government officially defines poor according to income data and
poverty thresholds. The PSA generates income data through a meticulous process of asking
detailed information on income through surveys. The DSWD, through their Listahanan, on the
other hand, obtains information on facilities (such as electricity, toilets, walls, roofs) and assets
(such as refrigerators, television sets, and the like), and on the basis of a statistical model
estimates household income.

There are errors in identifying poor households (when a non-poor household is thought to be
poor, or a poor household is tagged as non-poor), but DSWD has a process for delisting the non-
poor, and also for having the poor who are not in its list to be enlisted, subject to verification.

Further, the World Bank estimates that more than four fifths (82%) of Pantawid beneficiaries are
from the bottom 40 percent of income distribution, and more than half (53%) are from the
bottom 20 percent. Figure 1 shows that when Pantawid is compared in targeting accuracy with
other CCTs, the DSWD program performs better than all CCTs with a large coverage in the
population (of more than 15%), except for that of Brazil.
The costs and benefits of Pantawid Pamilya

Figure 1. Targeting accuracy to the poorest 20 percent of CCTs with more than fifteen percent
coverage of the population. Note: Estimates generated by World Bank Staff, as presented in
DSWD forum on Pantawid Pamilya 2nd Wave Impact Evaluation, Nov 14, 2014.

Another measure of poverty is the poverty gap index representing the average amount of income
required by the poor to reach the poverty line, in relation to the poverty line. APIS 2013 data
shows that Pantawid has increased the income of beneficiaries so that they have moved closer to
the poverty line: per peso cash grant, the poverty gap has been reduced by 61 centavos.

In 2013, Pantawid beneficiary families received an average of P1,407 of monthly cash grants, if
they sent their 3 beneficiary children to school, and received health services for their household
members. Without the cash grants, these families had an average per capita income of P13,293,
whereas the poverty line per person was P19,262. Thus, the amounts given will not really help
them cross the poverty line, but are only truly Pantawid. About half of cash grants are used for
The costs and benefits of Pantawid Pamilya
food, a quarter (25%) on educated-related expenses, while 7% is used on health, and close to
nothing is used for recreation or alcohol.

The PSA estimated that in 2012, the "income gap" of the poor, i.e. the total amount required for
all poor persons to cross the poverty line (assuming we could identify them and give them just
what they needed, without even considering the costs of identifying them) was P136.6 billion,
whereas the full CCT budget covered P39.4 billion.

So while the CCT budget is large, when you drill to the beneficiaries, this is still not enough to
help them get out of poverty.

The amounts have even been eroded by inflation: in the pilot program in 2006, maximum cash
grants were a fourth (23%) of household income, but by 2013, this went down to less than a tenth
(7%). Once children beneficiaries have finished schooling and join the labor market, we expect
the households to have better incomes, but this wont happen now.

Not the best way?

Finally, some opine that giving money to the poor is not the best way to help since the poor may
become dependent on that assistance.

A study by Dr. Aniceto Orbeta and Dr. Vicente Paqueo, two colleagues at PIDS, with Dr.
Christopher Spohr of ADB suggests that Pantawid has actually increased the desire for work of
the household head and the spouse, as well as all adult members 18 years and above, and middle-
aged workers 35-54 years old. They point out that parents work to compensate for loss of
income from children who attend school. When people publicly recognize the importance of
education, families are convinced to keep their children in school. Households also respond by
exerting more effort.

In terms of child labor, Orbeta, Paqueo and Spohr show that Pantawid also has significantly
reduced hours of work for pay of elementary school-aged children 6 to 11 years old, although
Pantawid did not significantly affect the incidence of child labor.

In an independent study, other colleagues at PIDS, namely, Dr. Celia Reyes and Mr. Christian
Mina, estimated using APIS 2011 that Pantawid increased school participation of children aged
6-14 by 3 to 4.6 percentage points. Around 96.3 percent of children of 4Ps families attend school,
while among matched non-4Ps families, i.e. households similar to Pantawid beneficiaries who
did not get cash grants, the school participation rate ranged from 91.7 to 93.3 percent. Increasing
school attendance has been the main objective of the program, and it is worth noting that the
program has achieved outcomes that it was designed for.

What deserves reexamination

The costs and benefits of Pantawid Pamilya
In a paper on inclusive growth that I helped prepare for the Asian Development Bank (ADB), it
can be seen that the proportion of the youth (aged 1524) in the Philippines (see Table 2) with
less than 4 Years of schooling (called education poverty rate) had hardly changed from 5.3% in
1993 to 4.9% in 2008. The Philippines has had little improvements in the average years of
schooling among young before government expanded the coverage of Pantawid.

In addition, data in 2008 shows that prior to Pantawid, the share of our youth with less than 4
years of schooling among the poor (19.0%) was as much as four times the national average
(5.3%).

Extreme Education Poverty Rate Education Poverty Rate

1993 2008 1993 2008
Lowest Quintile 7.2 19.0 7.2 18.8
Highest Quintile 0.6 1.2 0.3 0.7
Rural 3.0 8.5 3.2 7.9
Urban 1.0 2.7 0.7 2.3
Male 2.1 6.7 2.2 6.5
Female 1.7 3.9 1.6 3.3
National 1.9 5.3 1.9 4.9

Note: Estimates prepared by ADB staff using data from 1993 and 2008 National Demographic
Health Survey (conducted by PSA)

With the conduct of Pantawid, we would expect more and more returns to these investments in
human capital. The CCT was premised on the idea that the poor have more opportunity costs
sending their children to school, and that people respond to incentives.

There is growing evidence showing positive outcomes for Pantawid. In the long run, we would
expect to see even more evidence of impact on poverty conditions in the country.

What deserves reexamination in Pantawid is the uniform cash grant, which has eroded in value.
Opportunity costs for sending children to school and keeping them there is not uniform: for boys
(as against girls), for rural children (as against urban kids), and also for older kids, the costs are
higher, so incentives for these children must also be higher. - Rappler.com

Dr. Jose Ramon "Toots" Albert is a professional statistician who has written on poverty
measurement, education statistics, agricultural statistics, climate change, macro prudential
monitoring, survey design, data mining, and statistical analysis of missing data. He is a Senior
Research Fellow of the governments think tank Philippine Institute for Development Studies,
and the president of the countrys professional society of data producers, users and analysts, the
Philippine Statistical Association, Inc. for 2014-2015. From 2012-2014, he served as Secretary
General of the now defunct National Statistical Coordination Board (NSCB). He is also a
member of the United Nations Global Pulses Data Privacy Advisory Group.
The costs and benefits of Pantawid Pamilya