Income inequality and inequity

INCOME INEQUALITY is about incomes being unequal, which is a matter of fact, whereas income inequity is about incomes being unfairly shared, which is a matter of values. Both inequality and inequity are scientifically measurable.

Inequality. In the Philippines, income inequality is tracked every three years by the Family Income and Expenditure Survey (FIES). The latest FIES refers to incomes in 2009; its findings were first released in November 2010. So the next FIES, in 2012, won?t have findings until late 2013.

A thorough survey of income isn?t easy to do. The 2009 FIES questionnaire has 71 pages and 950 data items. Interviewing was done twice: once in July 2009, covering January-June, and again in January 2010, covering July-December. The sample size was 51,000 households?oversized for national statistics, but modest for province-level statistics.

At a forum to disseminate the FIES last week, Dr. Socorro D. Abejo, NSO household statistics director, reported that family income averaged P206,000 for 2009. The average is what all families would enjoy if incomes were perfectly equal. With the official poverty line now ?refined? to only P84,205 per annum for a family of five (based on P16,841 per capita), absolute equality would totally eradicate absolute poverty.

Ranking families from poorest to richest, the average income of the first 10 percent (Decile I) in 2009 was P41,000. In other deciles, average incomes were, in thousand pesos: II. 64; III. 81; IV. 100; V. 122; VI. 150; VII. 189; VIII. 244; IX. 342; and X. 728. The average of the richest decile was more than double that of the ninth, and over 10 times that of the poorest. Such comparisons are simple indicators of inequality.

In the same forum, former NSO director Tomas Africa?s talk, ?Family Distribution in the Philippines, 1985-2009: Essentially the Same,? was about income inequality being wide and unyielding for 24 years. He noted that the country?s top 100 taxpayers were not in the sample. (And income from corruption and criminality would never be reported, of course.)

Africa?s tabulations show total incomes of the richest 1 percent (185,000 families in 2009) to be as large as total incomes of the poorest 30 percent (5.5 million families). Using his results, I figure that the P728,000 average income in the 10th decile breaks down into P1.85 million in percentile 100 and P602,000 in percentiles 91-99.

Inequity. One way to assess inequity is to compare people?s perceptions of inequality with their ideals about them. In 2009, an SWS national survey for the International Social Survey Program asked respondents to choose from the five diagrams with descriptions below: (a) the type closest to what Philippine society is today, and (b) the type of society that the Philippines should be like.

Type A: ?A small elite at the top, very few people in the middle, and the great mass of people at the bottom.?

Type B: ?A society like a pyramid, with a small elite at the top, more people in the middle, and most at the bottom.?

Type C: ?A pyramid except that just a few people are at the bottom.?

Type D: ?A society with most people in the middle.?

Type E: ?Many people near the top, and only a few near the bottom.?

As to the present type of inequality, the survey-percentages were: A, 32; B, 39; C, 11, D, 10; and E, 6. Thus Filipinos generally see Philippine society as somewhere between Types A and B, which are both highly unequal. This perception is realistic.

As to the ideal type of inequality, the survey-percentages were: A, 6; B, 14; C, 11, D, 36; and E, 31. Thus Filipinos generally hope for a society somewhere between Types D and E, which are both egalitarian.

The contrast between the present and the ideal is an indication of the state of social inequity.

Source: Inquirer