Milei assured that poverty is falling: what data and experts say

president Javier Milea said yesterday at a party in Parque Lezama that ” poverty started to decline”, referring to the decline in the Indec measure, which showed a reduction from 54.8% to 51% from the first to the second quarter. However, some specialists explain that there are methodological problems that could have influenced this decline.

“Poverty does not arise overnight, nor can it be eliminated overnight; and although they left us with 45% poverty, and if all the bombs they left us with went off, poverty would have reached 95% and homelessness at 50% in the first quarter, although they avoided the crisis and directed the macro. In the first quarter, poverty rose to 55%. But I want to say something to all those stupid impoverishment hypocrites: poverty in the second quarter of the year was 51%; therefore, poverty began to decline in Argentina” said the president.

Leopoldo Tornarollieconomist and principal researcher at the Center for Distribution, Labor and Social Studies (Cedlas) of the National University of La Plata (UNLP), said that the drop between the first and second quarter was almost 4 percentage points and that the net decrease in bonuses was even higher, 7 percent points.

However, he suggested that a proper interpretation requires a good understanding of how the measurement works: “Is there a real decline,” he asked in a post on the X Network, “Something is due to the slowdown in inflation, but 7 points is too much.” in a period where there is still no to clear reactivation,” was answered. And then he asked rhetorically again? “I suspect there is a ‘detail’ in the methodology that may overestimate poverty in the first quarter and underestimate it in the second.”

“What is a ‘detail’? That the income for the 30 days before the interview is captured, but is compared to the line for the month of the interview. Example: poverty “January is calculated with December’s revenue, but with the January line,” explained Tornaroli. And he provisionally summarized the issue: “Given the development of inflation and this methodological issue, it is natural that poverty has decreased. But I wouldn’t be too quick to call it a recovery, at least until the reactivation of the economy is a reality.

Martin Rozadaeconomist and professor at Torcuato Di Tella University, said: “The logic of the poverty calculation methodology is that you collect what is supposed to be your August income and spend it in September, and the EPH captures this logic. A person buys goods and services at September prices (that’s what the base basket of the month reflects) for an August wage.”

The Argentine Observatory of Social Debt UCA stated in its report: “When closely monitoring quarterly developments, it is evident that the deterioration of the population’s quality of life, measured by indicators poverty and misery monetary, occurred as part of the effects of devaluation, a shock policy was applied in December 2023. The acceleration of the inflationary spiral that our country has already experienced and the limited recovery in the purchasing power of household incomes has led to the fact that between the fourth quarter of 2023 and the first quarter of 2024, according to the EPH survey, the number of people in poverty will increase from 14.6% to 20 .1% and the poverty rate from 45.2% to 54.8%.

“Consequently, between the first and second quarters of 2024, a slowdown in the growth rate of prices of goods and services, together with a modest recovery in real incomes, caused the population in distress to fall from 20.1% to 16.1% and from 54.8% to 51% of people in poverty ,” he added.

In another part of his speech, Milei stated: “And the sensitive Kukardos who say that we are not dealing with the social issue: if we take the AUH and take the food plan, today 100% of the basic basket is covered, when the government, which loved the poor so much, only covered 50% … they love the poor so much that all they do is multiply them. But now, with the corrupt at the helm, they have come to criticize the outcome of the poverty figures.”

However, ODSA estimated that the universal child benefit (AUH) and food card, although its coverage has been increased compared to December 2023, covers 50.2% of the basic food basket and 22.5% of the total basic basket.

This increase in basket coverage was intended to moderate the increase in poverty, which rose from 12.3% to 18.1% between the 2nd half of 2023 and the first half of 2024. But that didn’t happen, because according to Daniel Steingartdirector of productive planning at Fundar, most of the income of the poorest is not transfers from the state, but labor income, which has fallen. “In decile 1 (the poorest 10%), 62% of income comes from work,” he said.