Sunday, 20 September 2020

More Costa Rican households fell into poverty in 2019 despite indicator remains at 21%

During 2019, 7,047 Costa Rican households fell into poverty in 2019 despite the fact that the indicator remains at 21%. Extreme poverty was reduced to 5.8% this year compared to 6.3% recorded in 2018.

Although the poverty indicator in Costa Rica registered a slight reduction from 21.1% in 2018 to 21% this year, 7,047 new households fell into this condition in the country during 2019.

The data is derived from the Encuesta Nacional de Hogares (Enaho 2019) – National Household Survey – published last Thursday morning (October 17) by the National Institute of Statistics and Censuses (INEC).

According to the survey, a total of 335,985 households are in poverty this year, up from 328,848 last year.

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Urban poverty reached 19.8% of households, while rural poverty reaches 24.2%. Extreme poverty – those households whose per capita income is not enough to satisfy basic food needs – was reduced to 5.8% (93,542 households) this year, down from 6.3%  (99,034 households) in 2018.

The document states that while urban poverty has presented values in the range of 18.2% and 19.8% from 2010, rural poverty shows a decreasing trend, going from 27.4% in 2010 to 24.2% in 2019, and only a higher value is observed in 2014 when it affected 30.3% of rural households.

This behavior means that the gap between the percentage of households in poverty in urban areas and those in rural areas tends to decrease, in 2010 the gap was 8.4 percentage points, and by 2019 it reached 4.4 percentage points.

When analyzing the results by planning region, the Central Valley that has the majority of the country’s population is the one that shows the lowest incidence in both total poverty (17.0%) and extreme poverty (4.3%).

It follows as the second with the lowest incidence, Guanacaste with a value of 20.3%, this is the only region that shows a statistically significant change with respect to 2018, when the percentage of poor households was 26.0%. A similar situation occurred with extreme poverty in this region, which fell from 8.8% to 5.3%.

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Average household income by region in July of each year. Source El Financierio

To determine which households are in poverty, INEC defined the Línea de Pobreza (LP) – Poverty Line –  at a monthly income of ¢112,317 for the urban area and ¢86,353 in the rural area, to meet their needs.

While the income line for extreme poverty is defined at ¢50,618 for urban areas and ¢42,117 for rural areas.

The survey showed that the difference between the income of the poorest and the wealthiest is 17.6 times. This means that while households in the first receive on average ¢61,403, those in the latter ¢1,083,290.

Is the reduction sustainable?

Several factors explain the reduction in extreme poverty. The first of these is the increase in per capita household income, from ¢58,527 last year to ¢61,403 in the 2019 measurement.

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Although this year there was an increase in the income line based on which poverty and extreme poverty are defined, the average income growth of the poorest households was higher, which allowed an important group of families will get out of the extreme condition.

Multidimensional poverty

The INEC applies another measurement to determine poverty, Pobreza Multidimensional (IPM) – the Multidimensional Poverty Index.

This second methodology identifies which households are poor based on a set of social needs that are considered basic.

Multidimensional poverty at the national level reached 16.6% in 2019, its lowest level since 2010. The figure represents a significant reduction compared to 19.1% the previous year.

The IPM is calculated based on five dimensions: education, health, work, social protection, and housing and Internet use. Each dimension includes a series of four to five indicators that help to execute the measurement.

The survey concluded that considering the two methods – Poverty Line (LP) and Multidimensional Poverty Index (IPM) -, Costa Rica has 1.6 million households of which 70.4% are not poor, which represents 3.8 million people.

According to the survey, 13% are poor only by poverty line, 8.6% are only by multidimensional poverty and 8% are poor by both indices.


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