An agent-based approach to

modeling poverty in the Philippines

Leorey Marquez
CSIRO Data61
Gate 5, Normanby Road
Clayton, Victoria, Australia
leorey.marquez@csiro.au

Ariel Blanco, Elaine Robles, John Ornos

Training Center for Applied Geodesy and Photogrammetry
University of the Philippines
Quezon City, Philippines

Maria Marquez
Marquez and Associates
Malvern, Victoria, Australia

Abstract— This paper describes the development of the Pasay City Barangay-based Poverty Model (PCBPM), a simulation model of
poverty dynamics for urban regions using local government units as agents exhibiting the interactions between poverty, demographic
factors, geographic attributes, external events and internal interventions. The paper also discusses the application of PCBPM in an
exploratory case study investigating five scenarios representing conditions of population and jobs growth, occurrence of natural events
and implementation of intervention programs. The results of the case study show that the simulation approach can be a viable tool in
understanding the complexities behind poverty and its determinants, and in obtaining reasonable estimates of future levels of poverty
based on census and community-based monitoring data.

Keywords— poverty dynamics, agent-based modeling and simulation

I. INTRODUCTION
The Philippines remains as one of the poorest countries in Southeast Asia with 25.8% of the population and 20% of families
below the poverty threshold of Php10,534 as of March 2014 [1]. Successive Philippine administrations have made poverty reduction
the focus of the country’s development plan with mixed results. Poverty reduction efforts of the government such as Kapit-Bisig
Laban sa Kahirapan (KALAHI) and the Pantawid Pamilyang Pilipino Program (4Ps), need to target the appropriate demographic,
geographic and administrative areas in order to have maximum effect [2]. There is a need for an evidence-based method that can
help explain the dynamics and interactions between poverty and the set of significant demographic, economic, socio-cultural,
environmental and political factors in order to help develop programs and policies that maximize the chance for success while
minimizing the costs involved.
This paper describes the structure and methodology behind a poverty simulation tool called the Pasay City Barangay-based
Poverty Model (PCBPM). PCBPM is being developed to aid in understanding and evaluating the dynamics of poverty and its various
contributing factors in order to provide decision support to government policy-making and to maximize the effectiveness of future
program interventions aimed at reducing poverty. PCBPM calculates the number of poor households based on demographic and
geographical factors through an agent-based model which performs the simulation over a defined number of periods. PCBPM then
uses the estimation equations to generate yearly estimates of poverty levels under defined scenarios. This paper presents preliminary
results from the application of PCBPM to five scenarios in the City of Pasay, Philippines. The scenarios represent combinations of
levels of population and jobs growth, poverty incidence, natural events occurrence and government interventions.
II. ESTIMATING AND MODELING POVERTY
Traditional approaches to the modeling of poverty include multiple regression analysis, correlation analysis, household surveys
and time-series analysis. Recently, new approaches such as small-area estimation and simulation modeling have been used to derive
the determinants of poverty and focus government programs more effectively.
A. Small area estimation
Small-area estimation (SAE) provides a way of improving poverty survey estimates at small levels by combining survey data
with information derived from other sources, such as a population census [3]. Minot et al. [4] used SAE to estimate various measures
of poverty and inequality fro provinces, districts and communes of Vietnam. The National Statistical Coordination Board (NSCB)
[2] produced small-area estimates of poverty in the Philippines at provincial and municipal level in order to derive a single predictive
model for the whole country.
The multivariate analysis performed by Albert and Collado [5] identified demographic characteristics, education, housing
characterisitics, employment and occupation, other economic characteristics, and access to services and utilities as the principal
determinants of poverty in the Philippines. Arcilla et al. [6] used data from the 2005 Community Based Monitoring Survey (CBMS)
to identify correlates of poverty for Pasay City and Mogpog, Marinduque. Results from their multivariate analyses show a direct
correlation between average household size and higher poverty incidence prompting calls for more effective family planning and
education programs. Based on the correlation analysis, factor analysis, and regression analysis performed by Blanco et al. [7], poverty
incidence is attributable to household size, educational attainment, earning capacity and opportunity, and dependency of household
members on earning members.
B. System dynamic and agent-based simulation
Agent-based models have the unique ability to simulate spatially explicit interactions and behaviors of autonomous and
heterogeneous agents in order to observe and study the emergence of coherent (but dynamic) system behaviors at larger spatial and
temporal scales [8]. Davis and Weber [9] used dynamic simulation to model the impact on poverty incidence in Oregon of three
policy strategies: reducing high school drop-out and teen pregnancy rates, increasing the effectiveness of support programs to JOBS
applicants, and boosting job growth. Agent-based modeling and simulation (ABMS) enables different scenarios to be defined and
evaluated to produce effective strategies for policy making. Raptis et al. [10] presents an agent-based model of poverty growth which
incorporates environment characteristics, population characteristics and demographic characteristics to estimate how poverty is
affected by specific policies for growth and sustainability.
III. MODELLING FRAMEWORK
This section describes the structure and estimation techniques implemented in PCBPM. The methodology involves an application
of ABMS in the development of a learning tool, as well as an estimation tool, for poverty occurrence. This tool aims to discover and
examine the interaction of various demographic and environmental factors on household poverty, with the aim of forecasting future
levels of poverty. Evaluations and insights gained from the case study and decision support tool will be useful in guiding future
policies and intervention programs for poverty reduction.
A. IAFPI study
The main motivation for the PCPBM model and majority of the data used in the PCPBM case study came from the Integration
and Analysis of Biophysical and Socioeconomic Factors Affecting Poverty Incidence (IAFPI) project reported by Blanco et al. [7].
The IAFPI project developed mathematical models of poverty incidence in Pasay City using small area estimation techniques such
as ordinary least squares and spatial regression.
Pasay City is the fourth smallest city in the National Capital Region (NCR) of the Philippines with a total land area of 18.50
square kilometers and a population of 392,869 as of May 1, 2010. The city’s density of 21,236 person per sq. km. making it one of
the most congested cities in the country. The size of the city proper and reclamation areas comprises only 9.55 sq. km. because the
rest of the city’s land area is occupied by a complex that includes the Ninoy Aquino International Airport (NAIA) and Villamor Air
Force Base [7].
The focus of the IAFPI study were the 201 barangays of Pasay City. The barangay, a Filipino term for village or ward, is the
smallest local government unit (LGU) in the Philippines, administering from 200 to 4000 households through a barangay captain
supported by a barangay council. Barangays are the main repository of information on the poor and their characteristics (who they
are, where they live, how they respond to programs). With this profile, barangays are at the frontline in preparing comprehensive
community development plans as well as in delivering government programs on poverty and education [6]. Thus, the barangay was
chosen as the primary agent with which to simulate the interaction between poverty incidence and demographic and environmental
factors, natural events such as disasters, and government programs. Modeling poverty at the barangay level also removes the
complexities associated with personal and household transitions related to marriage, ageing and death.
B. PCBPM components
Using barangays as agents, PCBPM allows individual barangay behavior to be modeled in order to produce system-wide patterns
from simple interactions with other components. PCBPM operates with four main components:
 Barangay agents - This is the population of barangays that behave and interact in each simulation period using its various
attributes. Poverty and education levels are represented by barangay attributes such as the number of poor households, the
number of members in college, the average distance of public schools, etc.
  Environment object – A single object containing conditions and parameters affecting all agents for each simulation period.
For example, the parameters for population and jobs growth rate are used to estimate population and employment values for
each barangay from one simulation period to the next.
 Event objects – refer to external occurrences, such as disasters and conflicts, that directly affect the attributes of specific
barangays for a given period of time. For example, Typhoon Ondoy in 2009 produced moderate to massive flooding which
caused poverty rates to soar in the affected barangays. The impact of events on barangays is expressed in terms of adjustment
factors multiplied to specified attributes.
 Intervention objects – refer to internal actions or policies, such as disaster relief aid and infrastructure projects, that directly
affect the attributes of specific barangays for a given period of time. For example, school-building programs are used to affect
employment and education levels in barangays. The impact of interventions on barangays is expressed in terms of adjustment
factors multiplied to specified attributes.
C. CBMS data
The main source of data for the IAFPI study [7] and the PCBPM case study is the 2008 Community-Based Monitoring Survey
(CBMS) for Pasay City which covered 70,496 households for the household level data and 189,793 members in the member level
data. The 2008 CBMS produced a total of 77 variables in the household level data and 39 variables in the member level data. For
the IAFPI study, values in each variable were aggregated at the barangay level. Variables with binary values and containing
classification values were summed according to classification. For example, households were classified as poor or non-poor based
on whether the household income exceeded the poverty threshold of Php2000 per person per month. After proper integration of data
into barangay level, percentages with respect to the total number of households, total member count or with respect to the total value
of the variable were calculated [7]. Other geospatial data collated for the AIFPI study included road networks, barangay boundaries,
and points of interests such as hospitals, schools, banks and markets. The 2011 CBMS data was also available but was used sparingly
because of issues related to reliability and completeness [7].
D. Regression variables and equations
In order to identify the minimum set of variables needed to simulate the dynamics between poverty and education, a series of
iterations involving multiple regression, stepwise regression and the best model approach were performed on a combined set of 2008
and 2011 CBMS data and interpolated 2009 and 2010 data. The resulting set of 11 variables was then used as the initial set of barangay
attributes for the simulation of poverty incidence. The set includes:
 PsnPopn(i,t) – the number of persons in barangay i at period t.
 HHPopn(i,t) – the number of households in barangay i at period t.
 PoorHH(i,t) – the number of households in barangay i below the poverty threshhold at period t.
 Popn6_12(i,t) – the number of persons in barangay i from 6 to 12 years old at period t.
 Popn13_16(i,t) – the number of persons in barangay i from 13 to 16 years old at period t.
 MemFiftwdJobs(i,t) – the number of persons in barangay i 15 years old and above who have jobs at period t.
 MemTenLit(i,t) – the number of persons in barangay i 10 years old and above who are literate at period t.
 MeminColl(i,t) – the number of persons in barangay i who are students in college at period t.
 NoSchNotAtt(i,t) – the number of persons in barangay i who are 6 to 16 years old and not attending school at period t.
 School_Ten(i,t) – the average distance (in km) of the ten nearest schools to the center of barangay i at period t.
 School_Public_Ten(i,t) – the average distance (in km) of the ten nearest public schools to the center of barangay i at period
t.
Using the combined data set, regression equations were obtained for PoorHH, NoSchNotAtt, Popn6_12 and Popn13_16 using
barangay values from the same time period. Regression equations were also obtained for MemTenLit and MeminColl using current
period data as well as data from the previous time period. Figure 1 identifies the predictor variables used in the regression equations
for the six response variables. For example, the regression equation obtained for PoorHH is given by:

PoorHH(i,t) = 1.446 + 0.229*PsnPopn(i,t) + 0.111*HHPopn(i,t) + 0.071*MemFiftwdJobs(i,t) + (-0.301)*MemTenLit(i,t)+(-

0.298)*MeminColl(i,t) + (-16.718)*School_Public_Ten(i,t) +28.231*School_Ten(i,t) [adj.R2 = 0.768] (1)
 Note that the signs of the coefficients of the predictor variables are as expected except for MemFiftwdJobs. The positive
relationship with PoorHH occurs because the jobs counted in MemFiftwdJobs were mostly low-paying casual and irregular jobs
which did not ease the poverty level of the worker.
Similarly, the regression equation obtained for MemTenLit is given by:

MemTenLit (i,t+1) = 6.376 + 0.870*PsnPopn(i,t+1) + 0.089*HHPopn(i,t+1) + (-0.506)*PoorHH(i,t) + (-0.852)*

Popn6_12(i,t) + 0.578* Popn13_16 (i,t) + (-0.775)*NoSchNotAtt(i,t) [adj.R2 = 0.999] (2)

Note that the adjusted R2 of 0.999 means that the variation in MemTenLit is almost fully explained by the regression equation
using the current values for PsnPopn and HHPopn, and the previous values for PoorHH, Popn6_12, Popn13_16, and NoSchNotAtt.
E. Scenarios investigated
The initial case study for PCBPM explored five scenarios representing simple combinations of population growth, events and
interventions. The scenarios investigated were:
1. Base (Scenario 1AO) – This scenario simulates the barangays under a constant 3% population growth rate with no jobs
growth, no events and no interventions. This scenario represents a base case where simple poverty relationships can be
verified.
2. Constant jobs growth (Scenario 3AO) – This scenario replicates the base case but with a constant jobs growth rate of 2%.
This scenario illustrates the interaction between poverty, and constant population growth and jobs growth.
3. Projected population and jobs growth (Scenario 6AO) - This scenario replicates Scenario 3AO but with the growth rates for
Pasay City estimated from projections from the National Statistics Coordination Board [11]. This scenario illustrates the
interaction between poverty, and variable population growth and jobs growth.
4. Constant growth with events and intervention (Scenario 3BP) – This scenario replicates Scenario 3AO but with the event
Typhoon Ondoy scheduled to occur in 2009 (period 2) and a hypothetical school building program scheduled to occur in
2017 (period 10). The impacts of Typhoon Ondoy were adjustment factors that were estimated for selected barangays based
on the Ondoy Flood Map for Pasay City [12]. For the school-building program, adjustment factors for NoSchNotAtt,
MemTenLit, School_Ten and School_Public_Ten were estimated for all barangays to be applied in period 10. This scenario
illustrates the interaction between poverty, population and jobs growth, events and interventions.
5. Projected growth with events and intervention (Scenario 6BP) - This scenario replicates Scenario 6AO but with the event
Typhoon Ondoy scheduled to occur in 2009 (period 2) and a simulated school building program scheduled to occur in 2017
(period 10).
PCBPM is implemented in Anylogic 6.7 which provides the simulation platform with database links to tables managed using
Microsoft Access. A simulation run covers 50 time periods where each period represents one year.
IV. PRELIMINARY RESULTS
Figure 2 charts the average poverty incidence rate PovIn from the 201 barangays for each period for each scenario where PovIn
(%) = PoorHH / HHPopn *100.
The lines for Scenarios 1AO, 3AO and 3BP show that in general, poverty incidence decreases with population growth. With jobs
growth, poverty incidence increases as shown by line 3AO staying above 1AO. This observation can be traced from the CBMS survey
where most of the jobs reported were low paying casual or irregular jobs.
The impact of the typhoon event is clearly shown by the spike in poverty incidence in period 2 for Scenarios 3BP and 6BP.
Similarly, the impact of the intervention object is also visible from the dip in period 10 for Scenarios 3BP and 6BP.
Figure 3 charts the total number of poor households (PoorHH) from the 201 barangays for each period for each scenario. The
charts for 3AO and 3BP show that the total number of poor households are actually increasing even when the poverty incidence is
monotonically decreasing as shown in Figure 2. This illustrates the danger of relying on poverty incidence for measuring the success
of poverty alleviation programs.
Figure 4 shows thematic maps of the distribution of poverty incidence for Scenario 3BP at the initial period (period 0), when the
typhoon event occurs (period 2) and when the hypothetical intervention object occurs (period 10). The maps show that the poverty
impacts of natural events tend to persist longer, wider and deeper than those of interventions. This observation is also displayed in
Figure 2 and Figure 3 where the lines for Scenarios 3BP and 6BP are consistently above those of Scenarios 3AO and 6AO,
respectively. This implies that it may take a number of interventions to reverse the effects of a single natural event.
 V. CONCLUSION
This paper presented the components and methods behind PCBPM, a simulation model of poverty dynamics for urban regions
using barangays as agents exhibiting the interactions between poverty, demographic factors, geographic attributes, external events
and internal interventions. PCBPM was applied in an exploratory case study investigating five scenarios representing conditions of
population and jobs growth, occurrence of natural events and implementation of intervention programs. The analysis of the results
indicate that the simulation approach can be a viable tool in understanding the complexities behind poverty and obtaining reasonable
estimates of future levels of poverty based on census and community-based monitoring data. The knowledge gained from this case
study will be used to improve the framework, collect more accurate data and refine the regression equations to provide individual
models within barangays. Model development will also focus on expanding the set of factors used as determinants of poverty to
include employment, health and ageing, family structure, dwelling infrastructure and location, as well as expanding the set of
measures for poverty to include consumption, food and nutrition, and accessibility to services.
ACKNOWLEDGMENT
The authors wish to thank the National Anti-Poverty Commission (NAPC), the United Nations Children’s Fund (UNICEF) and
the City of Pasay for their support of the IAFPI project and the PCBPM case study.
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Fig. 1. Chart of regression equation variable links. Coloured arrows represent regression links from the predictor variables to the associated
response variables. Solid arrows indicate regression estimation for responses in the same time period (t) while broken arrows indicate estimation
of responses for the next time period (t+1).

Fig. 2. Chart of poverty incidence averaged over 201 barangays per period for the five scenarios
 Fig. 3. Chart of total number of poor households from 201 barangays per period for each scenario.

b) Scenario 3BP at period 2 with c) Scenario 3BP at period 10 with

a) Scenario 3BP at period 0 Typhoon Ondoy event school building program

Fig. 4. Thematic map of poverty incidence among 201 barangays from Scenario 3BP for periods 0, 2 and 10.