All you need to know about ADB's Social Protection Index

Published on Wednesday, 10 July 2013

Published by Sri Wening Handayani on Wednesday, 10 July 2013

What is SPI? – The Social Protection Index (SPI) is a relatively simple indicator that divides total expenditures on social protection by the total number of intended beneficiaries of all three social protection programs e.g., social insurance, social assistance, and labor market programs. The SPI can be disaggregated into the depth and breadth of coverage of social protection. Depth means the average size of benefits received by actual beneficiaries, and breadth means the proportion of intended beneficiaries who actually receive benefits. The SPI can also be disaggregated into its impact on the poor and the non-poor, as well as into its impact on women and men. In general, the SPI can be used to highlight the relative importance of those three major social protection programs. 

Why is there a need for SPI? - Most countries in Asia and the Pacific have limited institutional and technical capacity to carry out regular monitoring and evaluation on their social protection programs. The SPI, developed by ADB in 2005 and updated in 2013, summarizes the extent of social protection in the region. The SPI is important to provide recent information on the use of social protection programs in Asia and the Pacific. Systematic and rigorous monitoring and impact assessment of social protection is a prerequisite to improve the existing systems and developing new policies and programs. 

Is the SPI used for ranking of countries in Asia and the Pacific? – The revised SPI is not a composite index and should not be used for ranking of country on social protection programs. However, it can be disaggregated in various ways for analytical purposes. It is based on data collected from 35 countries in 2011 and takes a more unitary approach by highlighting the impact of expenditures on all beneficiaries. 

Is the national or international poverty lines used as basis for the SPI? –  No. Since calculating the revised SPI continues to rely on local currency units to express the expenditure data at the country level, it is necessary to identify a common means to normalize these expenditures by another monetary variable expressed in local currency units. The current indicator (expenditures per reference population) for the revised SPI is expressed in per capita terms; therefore, corresponding per capita normalization variable is needed. The revised SPI uses a simpler and more transparent solution: a relative poverty line for each country that approximate the average of national poverty lines across 27 countries in Asia and the Pacific for which social protection data are available. The regional average for the 27 national poverty lines is about 28% of GDP per capita. Hence, a poverty line for each country that is 25% of its GDP per capita is used for the revised SPI. This poverty line is expressed in per capita terms since it denotes the threshold of total expenditures that each person needs to exceed to be considered non-poor. The choice of a uniform percentage of GDP per capita mitigates the problem that some countries set their national poverty lines very low while others set them very high.

How was the data collected and analyzed? – Data collection for SPI has involved an extensive effort to gather information on social protection programs. For each of the 35 countries, a national consultant was recruited to collect date from the government. Most of this activity occurred in 2011. Extensive tables were constructed on each of social protection program, its expenditures, and its beneficiaries. Such data were collected for 2008, 2009 and 2010.  The justification was that the focus on this effort was the 2009 financial year for each country, which could extend into part of 2008 and 2010. A research team in ADB compiled and analyzed the data from 35 countries.

What are the main results of the Updated SPI? –The Social Protection Index: Assessing Results for Asia and the Pacific (2013) produced a wide range of results for the SPI across Asia and the Pacific as a whole. The SPI varies between 0.416 for Japan and 0.005 for Papua New Guinea. Thus, Japan’s social protection spending represents about 42% of poverty-line expenditures while Papua New Guinea’s represents a mere 0.5%. These percentages are equivalent to 10.5% and 0.125% GDP per capita respectively. 

In 2009, Asia and the Pacific already have seven upper-middle-income countries and 19 lower-middle-income countries out of the SPI sample of 35 countries. But the average SPI of the former group, 0.122, is well below 0.200. Also, it is not substantially higher than the average SPI of the latter larger group, 0.096. The average SPI for all 35 countries is 0.110 (11% of poverty –line expenditure or 2.6% of its GDP per capita). Only four countries have SPIs of 0.200 (or higher) representing 20% (or more) of poverty-line expenditures, or 5% of GDP per capita. Two of the four, Japan and the Republic of Korea, are high-income countries; the other two, Mongolia and Uzbekistan, are post-soviet transition economies which historically has comprehensive social protection systems.

Where can I find the methodology for SPI calculation, the country and regional reports and database? 

The SPI Database website, launched in July 2013, contains' annual data on social protection expenditures of ADB’s developing member countries (DMCs) for social assistance, social insurance and labor market programs Click here to access the database. 

The Social Protection Index: Assessing Results for Asia and the Pacific (2013) report analyzes comprehensive 2009 data on government social protection programs in 35 countries in Asia and the Pacific. Click here to download the full report.

The Revised Handbook on Social Protection Index (2012) is a methodology handbook contain of SPI formula, justification, and method for data collection and analysis. Click here to download the full report. 

The Social Protection Index for Committed Poverty Reduction (2006) or the “original SPI” was a summary measurement tool that systematically and consistently quantified national social protection activities in Asia and the Pacific. Click here to download the full report.