Home ›› 16 Apr 2023 ›› Editorial
The Household Income and Expenditure Survey [HIES] provides essential and pertinent information on several crucial variables that give a sense of direction in the effectiveness of significant policy issues and impart a clue in many fundamental criteria such as the status of the poverty, consumption, occupational quality, and nature of expenditure.
The HIES also yields raw data in calculating the consumer price index for a specific group of people or a general price index to determine the inflation in an economy. The report works as a bridge in intertemporal analysis and traces the trend. The HIES-2022 is the seventeenth in the series- the first round of HIES was conducted in 1973-74. last report was published in 2016. The HIES data series generated by the BBS is the primary data source for estimating poverty status.
The current survey considers the data from 14,400 households in 720 sampling areas. The accuracy of the data is ensured through the Computer---Assisted Personal Interviews [ CAPI]. However, the data set is about one-fourth of the data size of 2016. The HIES-2016 considered 46,080 households, but the HIES-2010 survey considered 12,240 households. Thus the data set of the HIES-10 and the HIES-2022 is more consistent. The BBS, in a note, clarified the rationale of the deviation; “ The HIES 2016 deviates from the sampling design used in the previous round of HIES 2010 in several ways. The objectives of HIES 2016 have changed significantly from HIES 2010. In HIES 2010, the sample was designed to provide reliable annual estimates at the division level with urban & rural breaks down. But in HIES 2016, the sample was designed to achieve three objectives: i) reliable annual estimates at 64 district levels, ii) reliable quarterly estimates at the national level, and iii) reliable annual estimates at the division level for urban and rural areas.’’ The change in sample design definitely could bring a few vital changes in the empirical conjecture and the consequent sampling error. The issue of the sampling frame is pertinent here, “the substantial increase in the sample size in the HIES-2016 forced to use a new sampling frame instead of the previous Integrated Multi-Purpose Sample [IMPS]. The IMPS is a master sample updated after each Census of Population and Housing. This IMPS was used as a sampling frame for the selection of Primary Sampling Units (PSUs) for HIES 2010 and also for other surveys in BBS.” It is essential that the BBS may add a note in the final version of the HIES-2022 on the sampling frame with justification on the semblance between the HIES-2010 and the HIES-2022.
The report divulges many encouraging tidbits on per capita monthly income, average calorie intake, food consumption, and household expenditures. The per capita monthly income registered in absolute value by Tk.7614 in 2022-- an increase of 93 percent from Tk. 3,940 in 2016. The average calorie intake is now at the 2010 level of about 2393 kcal per day; 2022 represents an increase of 8 percent over the HIES 2016. However, the almost identical monthly increase in household income and expenditure manifests savings at a modest level.
The poverty rate declined by 5.6 percent to 18.7 percent in 2022 compared to the HIES-2016; the poverty rate in rural areas was 20.5 percent and 14.7 percent in urban areas -- the percentage of poor people was 24.3 percent in 2016, with the extreme poverty of 12.9 percent. The current excessive poverty rate stood at 5.6 percent- the country is in a position to meet the sustainable development goals. It is soothing to know that the poverty level has decreased over a decade, but the increase in income inequality measured through the Gini coefficient signals problems in income distribution and the negation of inclusive growth. The income inequality widened further between 2016 and 2022. The Gini coefficient was 0.458 and 0.483 in 2010 and 2016, respectively, which now hover at about 0.499.
The findings catalog many issues contradictory in the prevailing economic environment in the aftermath of COVID-19 and the uncertainty inherent in Russia- Ukraine. The results on the decline of poverty need to be substantiated with more objective assessments, as surveys by a few think tanks portray a contrasting picture. The cumulative effect of job loss through supply chain disruption and price hikes of essential commodities was a blow to the poverty situation in Bangladesh. Despite myriad odds, the Bangladesh economy had smooth sailing with appreciable growth, although job loss and other job creation degraded the unemployment situation.
The data on income inequality depicts a trend that signals a few lapses on the part of the government in policies related to income distribution. Thus, the trend espouses the failure of the trickle-down effect on income distribution. Various policies and the loopholes in implementing these policies favor the wealthy class. Analogous to supply-side economics, the trickle-down philosophy during the Republican President Ronald Regan could not bring the desired change in income distribution. The concept of trickle-down attests that financial leverage, tax benefits, and incentives to be given to wealthy high-income earners, business owners, and corporations. This will result in overall economic growth and percolate gradually to different hierarchies, including the middle class, lower class, and the poorest section of society. It intends to uplift all classes of society. Unfortunately, the policy never worked as intended for economic growth, rather it negatively impacts government revenue collection and widens economic disparity. There are various channels and leverage in policy that favors the more affluent community in using the fund for personal benefit and acquisition of property in a foreign country. “Lower taxes on the upper class do not necessarily create more job opportunities or regain revenue but rather increase the inequality gap between the upper and lower classes.” It is more pragmatic to look into the fiscal policy that accounts for the various sources of revenue and the expenditure of the government. The case of ballooning NPL and the corruption related to the misuse of funds are the best examples. The trickle-down can be an effective tool when policymakers supplement government spending in various safety nets and augment the allocation of education and health sector programs, and design policies for employment creation.
The writer teaches at BRAC University and BIDS as an adjunct Faculty in the Master’s Programme in Economics. He can be contacted at [email protected]
