Early in July the National Statistics and Geography Institute (INEGI) published some shocking figures. It said that in the past year the number of poor people in Mexico had dropped from 53 to 48 percent during the 2012-2015 period. That is to say that the number of Mexicans living at the poverty level decreased by over nine percent. Not only that, it said that income had risen by 33 percent.
This may have sounded like music from heaven to President Enrique Peña Nieto’s group of economists, but the bubble promoted by INEGI President Julio Santaella would quickly burst.
Immediately, National Council for the Evaluation of Social Development Policy (Coneval) Executive Secretary Gonzalo Hernández criticized the results of the research (based on a poll of 8,000 families under social programs) which were the result of a change on the statistical methodology INEGI used without consulting with its partner institution Coneval.
The problem, Coneval said, was that, with a change to the poverty gauging methodology of the 2015 Economic Conditions Module, Coneval could no longer apply measurement to statistics because of a mismatch between the current INEGI result and the figures it was also using until last year.
It must be made clear that up until this snafu, INEGI had been considered a reliable economic measuring institute and most economists in banking and industry developed their evaluations based on its results.
But as a result of the INEGI poverty levels evaluation announcement, Santaella has been the target of a barrage of attacks directed mostly at the “deceiving” application of new gauging methods which in the eyes of many distort the nation’s economic reality.
Santaella has found some defenders, among them Banorte economist Gabriel Casillas, who wrote in financial daily El Financiero a defense of the new methodology, which he considers “an improvement over the previous one” and bangs critics, claiming their vision “is not well documented.”
Be it or not, on Tuesday Coneval announced that given its difference in figures, it will not make public its 2015 Poverty Report until something happens and a new INEGI evaluation appears to settle this difference.
Also, the United Nations Economic Commission for Latin America and the Caribbean (CEPAL) will step in to figure out just what is happening and why is there such a great difference in figures among the two prominent Mexican economic think tanks.
CEPAL President Alicia Bárcena said she was invited by Santaella to carry out the comparison and that CEPAL will assign the needed resources to come with a proper evaluation and put an end to the rift.
What remains an interesting part in this new but controversial INEGI measurement of poverty in Mexico during the President Peña Nieto administration is that in the midst of a 42 percent devaluation as well as fuel and electricity increases, people are making more money but they are keeping it secret, according to INEGI.
The reasons for the secrecy among the poor for their extra 33 percent income according to the INEGI methodology, which is no small fry for allegedly starving Mexicans, is two fold. One, they do not report the increased income fearing that the Tax Administration Service (SAT), the Mexican IRS, will try to collect more taxes. Second, given the insecurity in poor neighborhoods across the nation, many of them fear either being kidnapped by the abundance of bad guys, or being extorted. Hence most people “underreport” their gross income.
Be as it may the great controversy between INEGI and Coneval deserves a settlement that brings back trustworthiness to government figures.