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Mexico cuts poverty at a stroke – by changing the way it measures earnings

Escrito por Vibora. Publicado en Economía

Mexico cuts poverty at a stroke – by changing the way it measures earnings

(México reduce la pobreza de un solo golpe-cambiando la forma de medir los ingresos)

Change in methodology by national statistics institute provokes scepticism after it shows Mexico’s poor are richer by a third compared with last year

(Cambios en la metodología del Instituto Nacional de Estadísticas, provoca escepticismo, luego de que muestra a los pobres de México, más ricos, en un tercio en comparación con el año pasado)

David Agren | |in Mexico City - Monday 18 July 2016 22.54 BST

Mexico’s impoverished masses were up to 33.6% richer in 2015 than the previous year, according to the state-run statistics service.

But the change owes less to a sudden increase in actual wealth and wellbeing for the country’s poor than to unannounced changes in the methodology for measuring household earnings.

The changes make comparing poverty rates from one year to the next impossible – something acknowledged by the National Geography and Statistics Institute (Inegi).

But the tweak will allow image-conscious politicians to claim success in their anti-poverty programs and economic stewardship, even though public discontent over stagnant wages and rising prices remains widespread.

“Basically what the Inegi is saying is: we’ve been overestimating poverty levels,” said Jonathan Heath, an independent economist in Mexico City.

“The way that they did this” – without public consultation – “raises suspicion,” he added.

“The new poverty numbers are certainly going to fall by a significant amount and it’s not due to improvements, it’s not due to government action, it’s not due to anything. It’s due to the way Inegi has carried out this survey,” he said.

The methodological changes were revealed on Friday with the release of the 2015 edition of the Survey of Socioeconomic Conditions, which showed an overall real increase of 11.9% in household earnings. In some states, the increase was more than 30%, while the poorest Mexicans saw the biggest gain in earnings, according to Inegi.

The changes came as a complete surprise to social scientists and non-governmental groups, but were justified by Inegi as an attempt at obtaining a truer measure of poverty – a notoriously tricky undertaking as people tend to underreport their incomes.

Inegi said in a statement that it applied new criteria in the collection and review of field data, which allows it to “offer society and the State a more precise measure of household earnings”.

Measuring poverty has proved controversial in Mexico, where social programs are often criticized as vote-buying exercises and beneficiaries in some states are told erroneously that their benefits are conditional on supporting the party in power.

Mexico used to measure poverty based on income, but changed its methodology in 2008 to take a “multidimensional” measure based on six social necessities, according to Heath.

The information collected by Inegi is provided to the National Council for the Evaluation of Social Development Policy (Coneval), an agency responsible for measuring poverty rates and the performance of social programs. Coneval put the poverty rate at 46.2% of the population in 2014, an increase of 0.7% points from 2012.

“[The] changes lack public technical documents to justify them,” Coneval said in a statement. It added the increase in household earnings “is not congruent with the trend that has been shown in other Inegi documents and with other economic variables”.

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