Five steps of targeting:

1. Geographic targeting. a. Selection of Provinces based on Poverty Incidence: all municipalities in the poorest 20 Provinces were surveyed b. In other provinces, municipalities were selected based on Poverty Incidence: all barangays were surveyed in municipalities where poverty incidence is greater than 50 percent, while only pockets of poverty or portions of a barangay/municipality where clusters of poor households reside were surveyed in municipalities where poverty incidence is lower than 50 percent. 2. Conduct household visits to collect socio-economic information and information on household members using a two-page questionnaire. The data is encoded online at the DSWD regional offices. 3. A Proxy Means Test (PMT) is run to estimate household per capita income. Two separate models were used to estimate income for urban and rural households. 4. After income is estimated, households are classified into poor and non-poor, applying the official provincial poverty thresholds. 5. Validate the list of poor households by posting the list of poor households at the local level and by forming a Local Verification Committee.

Each step is explained below.

Step 1: Geographic targeting. The NHTS-PR geographically targets poor areas using the following surveys: a. Family Income and Expenditure Survey (FIES) produced by the National Statistics Office (NSO) in identifying the poorest provinces b. Small Area Estimates (SAEs) produced by the National Statistical Coordination Board's (NSCB) in ranking municipalities/cities by poverty incidence

Step 2: Household survey. The collection of data is done through household assessment.

Data collection strategy involves: (a) Saturation (complete enumeration) for all municipalities with poverty incidence of 50 percent and above and (b) Saturation (complete enumeration) only in pockets"*" of poverty for municipalities/cities with poverty incidence of 49 percent and below.

In conducting household assessment, information is gathered using the household assessment form (HAF), a two-page questionnaire with 34 observable and verifiable variables. All the information indicated in the household assessment forms are then encoded to a web application and subjected to Proxy Means Test (PMT).

Step 3: Proxy Means Test. Proxy Means Test (PMT) is a statistical model that estimates the income of households based on the proxy variables included in the household assessment form.

Why PMT?

PMT is deemed an efficient way of determining whether a household is poor or not. PMT has been proven to be an effective targeting mechanism in countries like Chile, Colombia, Costa Rica, and Mexico where the informal labor market is large, there are no information systems that allow verification of actual income for informal labor, and crosschecking across databases is not possible. The Philippines faces the same problems, with nearly 40 percent of the population employed in the informal Sector. Through the proxy means test, the government can do away with the long questionnaires and can eliminate manipulated response. With the use of the proxy variables, the government can predict the income of a household and easily rank this side by side with the current poverty threshold.

How does PMT work?

The variables in the PMT were chosen through the R-Square Test, which computes the percentage strength of a variable as an indicator or predictor of income. A good indicator of household income must rate at least 60 percent or higher in the R-Square Test. The variables used by NHTS-PR for the urban model rate 66 percent while those used for the rural model rate 70 percent. Variables cannot be easily manipulated by the respondents and are easily observable and verifiable by enumerators when conducting the assessment. Some good indicators of income include household composition, education of household members, housing conditions, and access to basic services. These variables were sourced out from the Family Income and Expenditure Survey (FIES) and Labor Force Survey (LFS) of the National Statistics Office (NSO).

The PMT model estimates household income using proxy variable weights, which are then multiplied by the answer (yes or no, etc.) of the respondents in the HAF.

Step 4: Classification of households as poor or non-poor

After incomes are estimated using the PMT, the estimated income of a household is compared to the poverty threshold per province (using official poverty thresholds computed by the NSCB) to determine if it is poor or non-poor.

Households with estimated income that fall below the poverty threshold of their province are then classified as poor. A preliminary list of poor households is then generated, which will be subject to validation.

Step 5: Validation

Validation is a process of assessing the list of poor and non-poor households nationwide. During the validation, the preliminary list of poor households (generated from regular enumeration, as well as on-demand application) is posted in municipalities/barangays to identify erroneous entries. A Local Verification Committee (LVC) is organized to resolve all the complaints/appeals received during the validation period.

These are the types of complaints/appeals that are resolved during validation:

A specific household should not be included in the list of poor households. A specific household is poor and should be included in the list of poor households.

A specific household was not visited/interviewed during the previous enumeration. The enumerator entered wrong information in the household assessment form. The preliminary list of poor households is incomplete and does not represent the actual number of poor households in the community. For households that were visited but were not assessed (due to reasons such as: no household members were around during the visit, household members present were not qualified to be interviewed (below 18 yrs old) or household refused to be assessed), it is a protocol for the enumerators to revisit these households at most, three times, to conduct the household assessment. This process is known as call back.