Multidimensional poverty

What Is Multidimensional Poverty?

Multidimensional poverty identifies poverty as a complex issue extending beyond mere lack of income to encompass various deprivations an individual faces simultaneously across different aspects of life. This concept belongs to the broader field of development economics and social indicators, providing a more holistic view of human well-being. Unlike traditional measures that often focus solely on monetary thresholds, multidimensional poverty considers factors such as poor health, lack of education, inadequate standard of living, and insufficient access to basic services. The aim is to capture the overlapping and simultaneous nature of these deprivations, revealing a more nuanced picture of how poverty is experienced. This comprehensive approach is crucial for effective poverty reduction strategies.

History and Origin

The concept of multidimensional poverty gained significant traction with the development of the Multidimensional Poverty Index (MPI). This measure was jointly launched in 2010 by the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford and the United Nations Development Programme (UNDP) for inclusion in the UNDP's flagship Human Development Report.³⁴, ³⁵ The MPI was designed to replace the Human Poverty Index (HPI), which, while pioneering, primarily used country averages and could not identify specific individuals or households as jointly deprived across multiple factors.³³ The development of the MPI was heavily influenced by economist Amartya Sen's capability approach, which posits that development should be assessed by people's ability to achieve "functionings"—what a person can do or be. T³¹, ³²his shift marked a critical moment in how global poverty is understood and measured, moving beyond solely household income metrics.

Key Takeaways

• Multidimensional poverty considers multiple deprivations beyond just income, including health, education, and living standards.
  *³⁰ The Multidimensional Poverty Index (MPI) is a key tool for measuring acute multidimensional poverty globally.
  *²⁹ It identifies individuals or households as poor if they are deprived in a specified minimum threshold of weighted indicators.
  *²⁸ Multidimensional poverty measures are crucial for understanding the complex nature of poverty and targeting policy interventions more effectively.
  *²⁷ The MPI provides both the incidence (headcount) and the intensity of poverty, offering a more complete picture of deprivation.

²⁶## Formula and Calculation

The Multidimensional Poverty Index (MPI) for a given population is calculated by multiplying two main components: the headcount ratio (H) and the intensity of poverty (A).

²⁵The headcount ratio (H) is the proportion of people who are identified as multidimensionally poor. T²⁴he intensity of poverty (A) is the average proportion of weighted deprivations suffered by multidimensionally poor people.

²³The formula for the MPI is:

$MPI = H \times A$

Where:

• (H) = Headcount Ratio (percentage of the population identified as multidimensionally poor)
• (A) = Intensity of Poverty (average deprivation score among the poor)

To determine if a person is multidimensionally poor, the MPI uses 10 indicators grouped into three equally weighted dimensions: health, education, and living standards. E²²ach indicator within these dimensions has a specific weight. A person is considered multidimensionally poor if they are deprived in at least one-third (33.33%) of the weighted indicators.

²⁰, ²¹The dimensions and their associated indicators and weights are as follows:

1. Health (Weight 1/3):
   • Nutrition (1/6)
   • Child Mortality (1/6)
2. Education (Weight 1/3):
   • Years of Schooling (1/6)
   • School Attendance (1/6)
3. Living Standards (Weight 1/3):
   • Cooking Fuel (1/18)
   • Sanitation (1/18)
   • Drinking Water (1/18)
   • Electricity (1/18)
   • Housing (1/18)
   • Assets (1/18)

For example, a household is deprived in the electricity indicator if they lack access to it. T¹⁹he total deprivation score for an individual is the sum of the weights of all indicators in which they are deprived.

Interpreting the Multidimensional Poverty

Interpreting the multidimensional poverty score goes beyond simply identifying who is poor; it also reveals how they are poor. A higher MPI value indicates greater incidence and/or intensity of poverty. For instance, an MPI of 0.20 suggests that, on average, the poor are deprived in a significant portion of the weighted indicators, or a larger percentage of the population is poor.

The index can be disaggregated by various characteristics, such as geographic region (urban/rural), ethnic group, and age group, providing valuable insights for targeted resource allocation. A¹⁸nalyzing the composition of the MPI by its individual indicators shows which specific deprivations are most prevalent among the poor, enabling policymakers to address the most acute needs. For example, if a high MPI is driven significantly by a lack of education access, then interventions in schooling would be prioritized.

Hypothetical Example

Consider a hypothetical country, "Econoland," with two households, Household A and Household B. Each household has three members.

Household A:

• Health: All members are nourished, no child mortality. (Not deprived)
• Education: No household member completed six years of schooling, children do not attend school. (Deprived in both education indicators, total weight = 1/6 + 1/6 = 1/3)
• Living Standards: Uses wood for cooking, has an improved sanitation facility shared with neighbors, has access to drinking water, no electricity, lives in inadequate housing, owns no significant assets. (Deprived in cooking fuel, sanitation, electricity, housing, assets, total weight = 5/18)

Total deprivation score for Household A = 1/3 (Education) + 5/18 (Living Standards) = 6/18 + 5/18 = 11/18 ≈ 0.61. Since 0.61 is greater than the 0.333 poverty cutoff, Household A is identified as multidimensionally poor.

Household B:

• Health: All members are nourished, no child mortality. (Not deprived)
• Education: All adult members completed more than six years of schooling, all children attend school. (Not deprived)
• Living Standards: Uses clean cooking fuel, has an improved and unshared sanitation facility, has access to drinking water, has electricity, lives in adequate housing, owns significant assets. (Not deprived)

Total deprivation score for Household B = 0. Household B is not considered multidimensionally poor.

If Econoland only consists of these two households, and assuming Household A represents the only poor household out of two, then the headcount ratio (H) would be 0.50 (1 out of 2 households). The intensity of poverty (A) would be 0.61 (average deprivation score of the poor).
Therefore, Econoland's MPI would be (0.50 \times 0.61 = 0.305). This quantitative analysis shows both the prevalence and depth of poverty in this simplified scenario.

Practical Applications

Multidimensional poverty measures are widely used by governments, international organizations, and non-governmental organizations to inform policy, monitor progress, and allocate resources effectively. The global MPI, published by OPHI and UNDP, covers over 100 developing countries, providing a crucial tool for global poverty reduction efforts. It ¹⁶, ¹⁷helps countries monitor progress towards the Sustainable Development Goals, particularly Goal 1, which aims to end poverty in all its forms everywhere.

Fo¹⁵r instance, the MPI's disaggregation capabilities allow for identifying specific subnational regions or demographic groups that experience acute deprivations, enabling targeted policy interventions in areas like healthcare access or infrastructure development. Many countries have also developed their own national multidimensional poverty indices, tailored to their specific contexts and priorities, often as part of their regular poverty monitoring systems. The¹⁴ World Bank also produces its own Multidimensional Poverty Measure (MPM), which includes monetary poverty alongside non-monetary indicators, further enhancing the understanding of global poverty.

##¹³ Limitations and Criticisms

Despite its advantages, the concept of multidimensional poverty and particularly the MPI has faced some criticisms. One common critique is that the selection and weighting of indicators can be subjective and may not fully capture all aspects of deprivation that people value, such as personal safety, quality of work, or psychological well-being. For¹¹, ¹² example, a paper from the German Institute of Development and Sustainability highlights that the MPI's simplicity, while appealing, leads to methodological weaknesses, such as assuming no correlation between deprivation indicators, which is often unrealistic (e.g., sanitation and drinking water are related to health).

An¹⁰other limitation is that while the MPI is robust in identifying the incidence and intensity of poverty, it may not adequately reflect inequality among the poor or intra-household differences in deprivation. For⁸, ⁹ instance, transferring items from a poor to a less poor household might not change the MPI score if both remain classified as poor. Fur⁷thermore, the choice of the poverty cutoff (e.g., 33.33% of weighted deprivations) is often considered arbitrary, and changing this threshold could impact poverty rates and country rankings. The⁶se critiques suggest that while multidimensional poverty measures offer significant improvements over single-dimensional approaches, they are not without imperfections and should be used in conjunction with other metrics for a comprehensive understanding of poverty.

Multidimensional Poverty vs. Income Poverty

Multidimensional poverty and income poverty are distinct but complementary concepts used to assess deprivation.

Confusion often arises because both aim to measure poverty, but they approach it from different angles. A household might earn above the income poverty line but still be multidimensionally poor due to lack of access to clean water or proper sanitation. Conversely, a household below the income poverty line might still have access to some basic services that prevent them from being classified as multidimensionally poor if their deprivations are not sufficiently widespread. Multidimensional poverty offers a broader lens, acknowledging that financial resources alone do not guarantee a life free from diverse forms of deprivation.

FAQs

What are the three dimensions of the Multidimensional Poverty Index (MPI)?

The three dimensions of the MPI are health, education, and living standards. Each dimension is equally weighted at one-third.

##⁵# How does the MPI identify a person as poor?
A person is identified as multidimensionally poor if they are deprived in at least one-third (33.33%) of the weighted indicators across the health, education, and living standards dimensions.

##⁴# Why is multidimensional poverty measurement important?
Measuring multidimensional poverty provides a more comprehensive understanding of deprivation by looking beyond income. It helps policymakers identify specific areas where people are deprived (e.g., lack of healthcare access or clean water) and design more targeted resource allocation and policy interventions to address complex and overlapping challenges.

##³# Does the MPI include richer countries?
The global Multidimensional Poverty Index primarily focuses on low- and middle-income countries, covering over 100 developing nations. This is because acute poverty, which the MPI is designed to measure, is more severe and widespread in these regions.

##²# What are some examples of indicators used in the MPI?
Examples of indicators include nutrition and child mortality (for health), years of schooling and school attendance (for education), and cooking fuel, sanitation, drinking water, electricity, housing, and assets (for living standards).¹