Oct 20, 2021
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Lies, big lies and counting the poor in Russia

Lies, big lies and counting the poor in Russia

Photo: Valentin Sprinchak / TASS.

The authorities are once again going to change the method of accounting for poverty in the country or, as it sounds in the official wording, “to improve the methods for assessing the financial situation of Russians.” Rosstat has already placed on the public procurement portal a contract for 3.52 million rubles to carry out the relevant research work, which will become the basis for a new counting system.

It should be noted that in recent years Rosstat has been “improving” the calculation methods with enviable regularity, and after each statistical innovation, the number of poor in Russia is getting smaller and smaller. So, this summer, the number of citizens with incomes below the subsistence level fell by almost two million compared to the same period last year. But this happened after a change in the methods for determining the subsistence level itself – if earlier it was calculated once a quarter, then from 2021 – once a year. In addition, it is now tied not to the consumer basket, but to median income, which is especially convenient against the backdrop of a sharp rise in food prices.

Prior to that, the methodology for calculating income and expenses changed in March 2019 – the statistical department began to take into account 59 indicators instead of 32, reducing the share of “unobservable income” from 26% to 11.5%. As a result, at the end of 2020, the poverty level in Russia was 12.1%, or 17.8 million people. This is the lowest value since 2014.

Now, the monitoring of the incomes of the poor will become even closer, after which it may turn out that they are not poor at all. In particular, the new approach provides for the introduction of a longitudinal, that is, a continuous method of monitoring the income and social benefits of the population. This term means that the selected households will be monitored for more than a year and track the dynamics of their situation, income and expenses. There is no such constant monitoring now.

It will also be possible to obtain more information about population groups that are underrepresented in the classical sample model – large families, people with very high or very low incomes, student households.

When accounting for income, financial and non-financial assets of citizens, for example, investments, will also be taken into account. The most interesting thing is that Rosstat plans to take into account “social transfers and grants in kind”. They are understood as “the purchase of goods, works, services carried out by government bodies in favor of citizens subject to legislation on social protection of the population, and accounted for in the amount of monetary value.” That is, the use of the dairy kitchen for children, the free repair of the tap, or the receipt of rehabilitation funds for the disabled will soon be included in the “income” column. This means that one can expect that after such calculations, the poverty level in Russia will sharply decline again, as well as the number of recipients of social assistance.

September 25 the President of the Russian Federation Vladimir Putin at a meeting with the leadership of the Duma parties, he once again spoke about the need to reduce the level of poverty in the country to a minimum, “pulling out a significant number of people from it.” True, it is unlikely that he meant juggling with numbers.

As told “SP” Head of the Laboratory for the Level and Quality of Life of the Institute of Socio-Economic Problems of Population of the Russian Academy of Sciences; Director of the Scientific Center for Labor Economics of the Russian Economic University named after Plekhanova Vyacheslav Bobkov, the new system also has pluses, for example, long-term research. But there is also a significant disadvantage – as a result, some recipients of social assistance may lose it, since they will no longer be formally considered poor.

– Rosstat plans to switch to panel or longitudinal sampling instead of random sampling. This means that they will lead the same households for several years, which makes it possible to study more deeply the dynamics of expenditures and incomes of social groups that will be included in this panel. Now they are pedaling the topic of families with children and pensioners, which is correct.

But this sample also has disadvantages, because it does not record the general situation in the country. To be representative of the entire population and not of individual categories, this sample must be very large. I believe that it is necessary not to abandon the current system, but to introduce additional longitudinal observations, although this will certainly be more expensive.

Otherwise, there is a danger that some groups of the population will not be taken into account. But there is a huge difference in the welfare of, for example, young families with children and without children, or pensioners who live with their families and separately. We do not yet know which categories will be included in this panel sample and who will determine them.

The second question is what conclusions will be drawn from this study. Apparently, Rosstat will identify not only income, but also natural services that will be converted into money. Thus, they will increase the level of income in the target groups that fall into the sample. This means that at the same poverty line, its level will decrease. And fewer people will receive targeted support.

“SP”: – How correct is this approach?

– From the point of view of more accurate accounting of the material situation of households, this is correct. But from the point of view of the fact that our subsistence level is very low and is at the level of 12 thousand rubles, this is wrong. If the poverty line had been raised at the same time, and according to our calculations, it should have been raised to 2.5−3 of the current subsistence minimum, then we could talk about a more scrupulous calculation of income. But if the poverty line remains very low, and at the same time they say that people live better by converting payments in kind into money, some of the current recipients of targeted support will lose it. Given the already extremely low cost of living, this is wrong.

“SP”: – Will these people, having lost their targeted support, after a while will not again fall into the ranks of the poor?

– The fact is that the amount of benefits for needy we have today is such that it does not take anyone out of poverty. It only raises household incomes slightly. In addition, the poverty level is determined before benefits are paid, and only then are they assigned. This means that these people will initially be assigned a different level of income, and they will not need benefits.

In general, if we talk about new methods, in my opinion, it would be more correct to consider poverty not in terms of income, but in terms of expenses. Consumer spending is what people live on. From income, you need to deduct mandatory payments and fees, savings, and you will be left with what you spend on everyday purchases. If we consider poverty in consumer spending, the picture will be completely different and closer to reality.

Our research has shown that if we add up consumer spending and natural consumption, as Rosstat wants, it turns out that poverty in our country is higher than when it is calculated by income. In 2010, poverty in terms of income used for consumption in relation to the consumer basket was 14.5%, and in 2020 – 17.7%. This shows that over the past ten years poverty has increased in our country, not decreased. By the way, abandoning the consumer basket when calculating poverty is a wrong step, but this is a separate topic for conversation.

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