Socioeconomics: The Story Behind the Numbers

Associate Professor Tomoki Fujii of the SMU School of Economics seeks to understand the complexities behind poverty, nutrition and other hot-button issues in developing countries.

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Photo Credit: Singapore Management University

By Yamini Chinnuswamy

SMU Office of Research (7 Sep 2014) – Whenever you encounter socioeconomic statistics in a newspaper, such as “1.7 billion people in Asia live on less than US$2 a day”, you may not think too hard about where they come from. Typically, these statistics are derived from surveys where an enumerator (a person who takes a census or a survey) moves from household to household asking questions about expenditure, income and so on.

As Tomoki Fujii, Associate Professor at the Singapore Management University (SMU) School of Economics, points out, these sample surveys may not always be helpful to governments and international aid organisations. Not only are such surveys lengthy, labour-intensive and costly, they usually sample only particular towns or villages, as opposed to an entire population.

“When governments want to develop programmes to assist the poor or undernourished, they need to know where these vulnerable groups are located. Household surveys, which are the main source of poverty or nutrition statistics, typically do not provide this information,” he says.

Professor Fujii seeks to address this lack of data with his research. “By combining these household surveys with census information in a method known as small-area estimation, I am able to derive a more detailed picture of poverty and nutrition at a micro-level.” These finer estimates can then be used by governments or international organisations to analyse the situation and direct resources to the communities where they are most needed, he says.

Most of Professor Fujii's work is centred on developing countries in Asia and elsewhere in the world, drawing from various data sources to derive perspectives not only on poverty but also on child nutrition and other hot-button issues.

For example, in a series of studies on poverty and child undernourishment in Cambodia, he used both demographic health surveys and census data to show that poverty tended to occur in clusters, while undernourishment was more spread out in the country. Such patterns were previously unknown. Professor Fujii’s estimates have been included in the National Poverty Reduction Strategy Paper, a key document on poverty reduction that helps the Cambodian government and aid organisations to decide how to make the best use of limited resources to tackle poverty and undernutrition.

“For poverty-related issues, geographic targeting is a viable solution whereby resources can simply be allocated to the particular areas where the poor are concentrated,” explains Professor Fujii. “However, this will not be as useful in dealing with child undernourishment in Cambodia, as policy-makers cannot focus on specific communities. Rather, they must consider all communities when developing programmes or initiatives to deal with this problem.”

Inequality’s disproportionate impact on the poorest of the poor

During the course of Professor Fujii's research in the region, one trend has stood out: the rise of national inequality, an issue that is closely related to but separate from poverty.

“Historically, the dialogue about poverty revolves around absolute poverty, namely where someone is unable to meet the most basic of needs,” says Professor Fujii. “Poverty in this absolute sense has been by and large successfully reduced in East Asia, although there remain some sizeable pockets of poverty.”

“You might expect this kind of poverty to be reduced when overall income level elevates, but what you actually find is that even when the economy as a whole grows, the fruits of growth are not always shared with the poor.”

Professor Fujii’s recent study showed that decreases in the national poverty rate had not kept pace with economic growth in the Philippines from 1985 to 2009. He found that overall inequality actually increased during this period, even though the inequality index had improved slightly since 2000. In another study of his that also used data from the Philippines, he observed that the impact of inequality was apparent in food inflation.

“I had first expected that poverty might increase as a result of rising food prices,” he notes. “But it turned out that poverty rate—the proportion of people living under poverty line—did not actually change. While some among the poor who were net sellers of food gained from the increase in food prices, there were those well below the poverty line who became worse off when faced with food inflation.”

According to Professor Fujii, it was the most vulnerable populations who appeared to have experienced the greatest negative impact of recent food inflation. For the “poorest of the poor”, the bulk of daily expenditures was channelled towards food and sustenance. As such, these groups were the most severely hit whenever food inflation struck.

Professor Fujii says the current trend of rising national inequality in many countries is likely to continue in the near future, hence making studies such as his more important than ever. While he is reasonably optimistic that poverty in the region can be substantially reduced over the next few decades, he expects inequality to become an even more pronounced social issue as economic progress in developing countries continues.

Finding synergies beyond development economics

Undoubtedly, tackling global issues such as poverty starts with untangling the many statistics that seek to quantify them. “There are a lot of intellectual challenges in measuring poverty and other socioeconomic outcomes,” notes Professor Fujii. “If you really think about it, it's not very clear what poverty is, and who, exactly, is poor.”

Poverty and nutrition are both broad subjects that extend far beyond development economics, which is one of the main areas of Professor Fujii’s research. He collaborates with Professor Denis Leung and Associate Professor Chang Pao-Li, who are experts in statistics and economics respectively. In addition, he frequently exchanges ideas with Assistant Professor Kim Seonghoon and Assistant Professor Madhav Aney, both of whom also specialise in development economics. Beyond his school, he sees potential synergies with colleagues from the School of Social Sciences.

Professor Fujii's work will become increasingly crucial to understanding the complexities of socioeconomic outcomes that affect developing countries. He hopes that, through his research findings, governments and international aid organisations will be in a better position to initiate solutions for those who urgently need them.

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