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A Simple Poverty Scorecard for the Philippines - About the Philippines

A Simple Poverty Scorecard for the Philippines - About the Philippines

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some timeless patterns but also some random patterns that, due to sampling variation,show up only in <strong>the</strong> 2004 APIS. Or <strong>the</strong> scorecard may be overfit in <strong>the</strong> sense that itbecomes biased as <strong>the</strong> relationships between indicators and poverty change or when it isapplied to non-nationally representative samples.Overfitting can be mitigated by simplifying <strong>the</strong> scorecard and by not relying onlyon data but ra<strong>the</strong>r also considering experience, judgment, and <strong>the</strong>ory. Of course, <strong>the</strong>scorecard here does this. Bootstrapping can also mitigate overfitting by reducing (butnot eliminating) dependence on a single sampling instance. Combining scorecards canalso help, at <strong>the</strong> cost of greater complexity.Most errors in individual households’ likelihoods, however, cancel out in <strong>the</strong>estimates of groups’ poverty rates (see later sections). Fur<strong>the</strong>rmore, much of <strong>the</strong>differences may come from non-scorecard sources such as changes in <strong>the</strong> relationshipbetween indicators and poverty, sampling variation, changes in poverty lines,inconsistencies in data quality across time, and inconsistencies/imperfections in cost-oflivingadjustments across time and space. These factors can be addressed only byimproving data quantity and quality (which is beyond <strong>the</strong> scope of <strong>the</strong> scorecard) or byreducing overfitting (which likely has limited returns, given <strong>the</strong> scorecard’s parsimony).27

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