A Simple Poverty Scorecard for the Philippines

4. Scorecard constructionAbout 60 potential indicators are initially prepared in the areas of:• Family composition (such as household size and female headship)• Education (such as school attendance of children)• Housing (such as the type of roofing material)• Ownership of durable goods (such as televisions and refrigerators)Each indicator is first screened with the entropy-based “uncertainty coefficient”(Goodman and Kruskal, 1979) that measures how well the indicator predicts poverty onits own. Figure 3 lists the candidate indicators, ranked by uncertainty coefficient.Responses for each indicator in Figure 3 are ordered starting with those most stronglyassociated with poverty.The scorecard also aims to measure changes in poverty through time. This meansthat, when selecting indicators and holding other considerations constant, preference isgiven to more sensitive indicators. For example, ownership of a television set isprobably more likely to change in response to changes in poverty than is the educationof the male head/spouse.The scorecard itself is built using the national poverty line and Logit regressionon the construction sub-sample (Figure 2). Indicator selection uses both judgment andstatistics (forward stepwise, based on “c”). The first step is to use Logit to build onescorecard for each candidate indicator. Each scorecard’s accuracy is taken as “c”, ameasure of ability to rank by poverty status (SAS Institute Inc., 2004).15