ATIENZA, Jose Emmanuel BSMATH - 1101

DE PEDRO, Jed Sky D.

ISIDRO, John Andrei R.
TORRANO, Kimberly Joy L.
AVERAGE ANNUAL INCOME OF THE PHILIPPINES IN 2015 AND 2018 BASED
ON THE AVERAGE ANNUAL INCOME PER REGION
OBJECTIVES
The data management output entitled “Average Annual Income of the Philippines in 2015 and 2018
Based on the Average Annual Income per Region” aims to compute the measures of central tendency of
the average income in the Philippines last 2015 and 2018. Specifically, it aims to:
a. determine the most suitable measure of central tendency;
b. determine the most appropriate graphical representation of the data;
c. discuss the effects of changes in annual income; and
d. explain the reason behind the higher income in urban areas.

DATA AND COMPUTATION

Table 1. Average Annual Family Income in the Philippines per Region in 2015
Region Total Number of Average Income
Income (in Families (in (x) in thousands
millions) thousands)
National Capital Region (NCR) 1,282,823 3,019 424.92
Cordillera Administrative Region (CAR) 113,531 402 282.42
Region I (Ilocos Region) 278,515 1,170 238.05
Region II (Cagayan Valley) 193,589 816 237.24
Region III (Central Luzon) 750,054 2,507 299.18
Region IV-A (CALABARZON) 1,013,942 3,251 311.89
Region IV-B (MIMAROPA) 154,612 697 221.82
Region V (Bicol Region) 236,476 1,262 187.38
Region VI (Western Region) 384,039 1,699 226.04
Region VII (Central Visayas) 399,734 1,672 239.08
Region VIII (Eastern Visayas) 191,720 976 196.43
Region IX (Zamboanga Peninsula) 156,872 824 190.38
Region X (Northern Mindanao) 227,998 1,029 221.57
Region XI (Davao Region) 285,560 1,156 247.02
Region XII (SOCCSKSARGEN) 198,438 1,055 188.09
Region XIII (Caraga) 114,745 579 198.18
 Autonomous Region in Muslim Mindanao 85,514 616
138.82
(ARMM)
Σx= 4048.51

Mean
Σ𝑥 4048.51
𝑋= = = 𝟐𝟑𝟖. 𝟏𝟒𝟕𝟔
𝑁 17

Median Average Income (x)

424.92
311.89
299.18
282.42
247.02
239.08
238.05
237.24
226.04 Median = 226.04
221.82
221.57
198.18
196.43
190.38
188.09
187.38
138.82
Mode
Since there is no value that occurred more than once, we can say that the data have no mode.
We can see in the distribution that there are no extremely high or extremely low scores in either,
which will commonly affect the average of the scores. Therefore, we may use the mean as a suitable measure
for distribution in central tendency since the distribution is fairly balanced.
We will notice that the mean value of the average income in its region is not equal to the average
annual income of the country because the given data is rounded - off to the nearest whole number.
Average Annual Family Income of the Philippines
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒 6,068,162
Average Annual Family Income = = = 266.97
𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐹𝑎𝑚𝑖𝑙𝑖𝑒𝑠 22,730
 The mean of the average annual family income by region is 238.15 (in thousands) while, the average
annual family income of the Philippines is 266.97 (in thousands). With this, we can clearly see that they are
not equal.
Table 2. Average Annual Family Income in the Philippines per Region in 2018
Region Total Number of Average Income (x)
Income (in Families (in in thousands
millions) thousands)
National Capital Region (NCR) 1,527,770 3,318 460.45
Cordillera Administrative Region (CAR) 149,519 422 354.31
Region I (Ilocos Region) 348,097 1,213 286.97
Region II (Cagayan Valley) 225,945 853 264.88
Region III (Central Luzon) 929,598 2,783 334.03
Region IV-A (CALABARZON) 1,444,429 3,760 384.16
Region IV-B (MIMAROPA) 189,684 737 257.37
Region V (Bicol Region) 300,778 1,280 234.98
Region VI (Western Region) 486,534 1,832 265.58
Region VII (Central Visayas) 566,572 1,839 308.09
Region VIII (Eastern Visayas) 239,889 1,059 226.52
Region IX (Zamboanga Peninsula) 191,059 839 227.72
Region X (Northern Mindanao) 280,508 1,120 250.45
Region XI (Davao Region) 344,108 1,284 268.00
Region XII (SOCCSKSARGEN) 273,827 1,131 242.11
Region XIII (Caraga) 150,299 619 242.81
Autonomous Region in Muslim Mindanao
105,870 657 161.14
(ARMM)
𝚺x= 4769.57

Mean
Σ𝑥 4,769.57
𝑋= = = 𝟐𝟖𝟎. 𝟓𝟔𝟑𝟐
𝑁 17
Median

Average Income (x)

460.45
384.16
354.31
334.03
308.09
286.97
 268.00
265.58
264.88 Median = 264.88
257.37
250.45
242.81
242.11
234.98
227.72
226.52
161.14

Mode
Since there is no value that occurred more than once, we can say that the data have no mode.
In the distribution, there is no extremely high or extremely low scores in either direction that can
unusually affect the average of the scores. Thus, the distribution is fairly well-balanced, and we can use the
mean as an appropriate measure of central tendency for this distribution. The mean value of 280.56
represents the total picture of the distribution.
The mean value of the average annual family income by region is not equal to the average annual
income of the country since the given data are just rounded off to the nearest whole number.
Average Annual Family Income of the Philippines
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒 7,754,486
Average Annual Family Income = = = 313.36
𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐹𝑎𝑚𝑖𝑙𝑖𝑒𝑠 24,746
The mean of the average annual family income by region is 280.56 (in thousands) while, the average
annual family income of the Philippines is 313.36 (in thousands). With this, we can clearly see that they are
not equal.
 Average Annual Family Income By Region
500
450
400
Average Income

350
300
250
200
150
100
50
0

Regions
2015 2018

Figure 1. The Graph of Average Annual Income of the Philippines per

Region in 2015 and 2018.
INTERPRETATION OF RESULTS
The Income Effect
The income effect refers to how the change in income will affect the
amount of goods or services that the consumers will purchase or demand
(Whiting, 2021). This can be measured using the income elasticity of demand
which shows how sensitive the quantity of goods demanded is with regards to
the change in income (Elsner, Heinrich, & Schwardt, 2015). According to the
principle of income effect, if a certain individual received an increase in their
income (Y), there will be also an increase in demand (Q) for different goods and
services. This can be seen in Figure 2 wherein the income elasticity of demand
is positive. On the other hand, a decrease on the individual’s income will lead to Figure 2. Positive Income
Elasticity of Demand
a decrease in their demand for different goods and services and a negative
income elasticity of demand.
Applying this concept, the increase in the average annual income of the Philippines from 266.97 (in
thousands) pesos in 2015 to 313.36 (in thousands) pesos in 2018 has led to the increase in demand for
goods and services wherein the change in prices of goods is minimal. This can be seen in the market demand
of clothing in the country where the market volume increased from 8.6 to 11.9 billion U.S dollars (Market
demand of clothing in the Philippines 2011-2018, 2015).
Average Annual Income in Urban Areas
As observed in Figure 1,
the National Capital Region (NCR) was the
region which had the highest average
annual income in the Philippines in both
2015 and 2018. In addition, the region has
reached a Gross Regional Domestic
Product (GRDP) per capita as of 2018 stood
at P253,893, a 40% jump from the
P181,748 in 2009. The National Capital
Region, or NCR, has the highest income of Figure 3. Metro Manila, one of the largest urban areas in the Philippines
all the regions, owing to its position as the country's economic, social, and political hub. Economically, this is
evident in Makati and Ortigas, the region's primary commercial districts. Even though Manila is designated
as the national capital, this region is also the headquarters of the Philippine government. Makati is regarded
as the main central business district of Metro Manila while Ortigas City is the second most important business
district in Metro Manila.
Moreover, among the islands of the country, it was NCR who has the highest average annual income
in Luzon, Region VII in Visayas, and Region XI in Mindanao. If we look into these regions more, it can be
observed that NCR has Metro Manila, Region VII has Metro Cebu, and Region XI has Metro Davao which
are the three largest conurbations, or regions with numerous cities and urban areas, in the country. With this,
it can be said that urban areas have higher average annual income compared to rural areas. Urban areas
tend to have higher income since they have a higher cost of living (Murphy, 2019). In addition, these areas
also have higher population density which leads to higher demand for housing that would eventually lead to
higher cost of living.
REFERENCES:

Elsner, W., Heinrich, T., & Schwardt, H. (2015). Chapter 7 - Real-World Markets: Hierarchy, Size, Power,
and Oligopoly, Direct Interdependence and Instability. In W. Elsner, T. Heinrich, & H. Schwardt,
The Microeconomics of Complex Economies (pp. 157 - 190). Bremen, Germany.
(2015). Market demand of clothing in the Philippines 2011-2018.
https://www.statista.com/statistics/616460/philippines-clothing-market-demand/: Statista Research
Department.
Murphy, R. (2019, September 9). Why is the ‘Cost of Living’ in Cities So High? Retrieved from Independent
Institute: https://www.independent.org/news/article.asp?id=12916
Whiting, B. (2021, October 13). The Income Effect in Economics. Retrieved from Study.com:
https://study.com/academy/lesson/the-income-effect-in-economics-definition-example.html