Exploring Global Poverty Using the Multidimensional Poverty Index
Poverty is Multidimensional
Poverty is not shortage of income or wealth alone; it is a state of multiple deprivations that can also come from social, cultural and political directions. It is a multidimensional issue of human development.
Traditionally, poverty is seen from a uni-dimensional perspective - as income-deficiency. This view point would suggest poverty reduction efforts to focus on boosting income by spurring the economic growth, ignoring all other factors of poverty. The World Bank is a major advocate of this method for developing countries. However, experience of past three decades tells a different story: economic growth primarily helps people with money. The richest corner most the benefits and the rest gain only marginally. A recent Oxfam report shows that just 1 percent population possess as much wealth as rest of the 99% humanity, and the inequality is only growing with time. 70% of global population lives in countries with rising inequality.
Even ordinary folks don't think that money alone can solve the problem of poverty. For example, I asked this question here at hubpages: Is giving money the only way to help poor people?. Not a single of about 400 answers suggested that giving money can solve the problem of poverty. The message is clear: lack of money is just part of the Problem, so it can only be a partial Solution! Therefore, poverty eradication has to go beyond the lecture room economics.
Moreover, the income "lens" of poverty tells nothing about the nature and extent of people's suffering. Therefore, clearly the non-monetary socio-economic and political factors aspects be included in poverty assessment. It was shown by the 'basic needs' methodology which identifies a bundle of basic necessities and assesses whether people have access to it. The 'bundle' normally includes requirements of food, shelter, sanitation, education,health services, transportation, etc. Of course, the bundle changes as the societies develops. Thus, people who have inadequate access to these basic needs are considered poor.
Then the United Nation’s Development Program (UNDP) came up the Human Development Index (HDI) in 1990 to check social progress. It which combines three dimensions of human development: health, education and living standard into one index. It was a major step away from the usual practice of measuring development in terms of GDP growth or per capita GDP which is blind to income distribution and non-monetary factors.
In 2010, along with OPHI the UNDP came up with an elaborate tool to map the shades and depth of poverty in the form of the Multidimensional Poverty Index (MPI).
The Multidimensional Poverty Index (MPI)
In July 2010, the UNDP and the UK-based Oxford Poverty and Human Development Initiative (OPHI) launched a new measure of poverty, called Multidimensional Poverty Index (MPI). It replaced the Amartya Sen and Sudhir Anand developed Human Poverty Index (HPI) being published since 1997. The MPI also uses the same dimensions as the HDI – education, health and living standard – and identifies overlapping deprivations at the household level. Therefore, it is like looking at various shades of poverty through a microscope. The MPI complements the income poverty measures with direct measures of deprivation, and provide a better insight into people's suffering.
In the MPI, the status of education is judged by two indicators: years of schooling and child enrollment. The health status is indicated by child mortality and nutrition indicators, and the living standard is measured by six sub-indicators: electricity, sanitation, drinking water, floor, cooking fuel, and asset ownership. These ten sub-indicators portray poverty with details of its shades.
So, what makes a household “multidimensionally” poor?
Obviously, any single deprivation does not represent poverty. The MPI requires a household to be deprived of at least 30% of its weighted average of total indicators. It reflects both the incidence and intensity of deprivations people are experiencing simultaneously. People deprived of 70% indicators are in deeper poverty than those deprived of say 50% or 30% indicators.
How is MPI Used?
The MPI can be used as an analytical tool to identify the most vulnerable people. It can show in which aspects they are deprived and need help to reveal the interconnections among deprivations. this allows policymakers to design policies and utilize resources more effectively.
The MPI can be constructed by country, region, ethnicity or any other grouping as well as by dimension, making it an ideal tool for the policymakers. Its value reflects both the incidence (percentage of people who are poor) and intensity (the average number of deprivations each household faces) of poverty. The index value ranges from zero to one - lower values mean lower poverty levels. People or households deprived in 7 indicators are clearly worst off than those deprived in 3 indicators.
The MPI Approach can be Customized at the Country Level
The multidimensional poverty approach can be applied using indicators and weights to create a poverty measure that makes sense at the country level. It will aid the governments and policymakers in designing effective anti-poverty programs. Even before the MPI was formally launched in 2010, a year before Mexico became the first country to adopt a multidimensional poverty measure reflecting multiple deprivations on the household level.
Then in 2011, Colombia introduced its own MPI-Columbia which assesses broader social and health-related aspects of poverty: education, employment, the condition of children and young people, health, access to public services and housing conditions. Now other countries such as Chile, Malaysia, Bhutan, and Vietnam have begun to apply the multidimensional poverty approach in their anti-poverty policies.
The MPI and the MDGs
The Millennium Development Goals (MDGs) are the most broadly supported, comprehensive and specific development goals the world has ever agreed upon. The ten indicators of the MPI are identical, or relate, to MDG indicators: nutrition (MDG 1), child mortality (MDG 4), access to drinking water (MDG 7), access to sanitation facility (MDG 7) and use of an improved source of cooking fuel (MDG 9).
Hence the MPI can be used to identify the most vulnerable people and identify different patterns of deprivations – clusters of deprivations that are common among different countries or groups. The MPI can be used to understand the interconnections among deprivations, help target aid more effectively to the most vulnerable, identify poverty traps and consequently strengthen the impact of interventions required to meet the MDGs.
Limitations of the MPI
Lack of relevant and comprehensive data is the first and foremost limitation of the MPI. Besides, it includes indicators of output, such as years of schooling as well as of inputs like nature of the cooking fuel. Further, in includes both the stock and flow indicators: A stock indicator is measured at a particular point in time but was accumulating over time. On the other hand, a flow indicator is measured per unit time.
A child death is a one-time affair; it is clearly a stock indicator. Things like school attendance or whether the household has access to clean water or improved sanitation are flow indicators as they change from time to time. Surveys don’t have flow indicators for all dimensions.
Second, the health data might overlook certain groups, particularly for nutrition. For instance, many countries have surveys that don’t include information on women, or on children.
Third, cross country comparability is not perfect for two reasons: First, information collected in the surveys differ and second, the minimum acceptable standards on certain indicators, particularly of living standard, may vary a great deal. However, such differences will be always there on any international measure. However, the bigger issue is the publicly available data which vary are hardly very recent and cover years between 2000 and 2010. Not all countries keep comprehensive and more frequent data on poverty.
Fourth, inequalities among different persons of same household may be significant and these are not reflected at present in the MPI.
Fifth, while the MPI goes well beyond the headcount ratio and includes the intensity of poverty but it does not measure the depth of poverty – ie, how far off people are from the deprivation cut off in each indicator. Further, it is indifferent to inequality among the poor. However, both these can be corrected in the national measures using the multidimensional poverty approach.
You may like to read this critique from a World Bank Director.
Income Poverty Vs Multidimensional Poverty
Shortage of income does not tell the kind of hardships people are facing For example, say deprivations such as malnutrition, kids out of school, poor health, or poor housing conditions. Societies can't be compared on income parameters. Many countries provide subsidized public services such as clean water, healthcare and education to all irrespective of their income level. In others, people have to pay and get these services. Thus, income level by itself can’t say if someone has adequate access to what they need, or not.
The multidimensional approach, on the other hand, gauges people's life from several different specific angles that taken together make up their level of well-being. Being specific, each indicator points to a clear policy intervention. Thus, it is a direct measure of people's "lack of well-being" that we call poverty.
World's MPI Poor
Countries with Largest percentage of Poor
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What does the MPI Tell us?
There are more MPI Poor than income poor: The MPI has revealed that the world is poorer than expected. The MPI 2013 analysis of 104 countries with a combined population of 5.4 billion revealed that a total of 1.6 billion people (over 33%) are living in multidimensional poverty. This is more than the World Bank’s estimate of extreme poor (1.2 billion) living within $1.25 per day. It is a reduction of from the estimate of 1.75 billion in 2010 when the MPI was first launched. These include 29 Low Income Countries, 67 Middle Income Countries and 8 High Income Countries. Of these 1.6 billion people, 51% live in South Asia, and 29% in Sub-Saharan Africa. Most MPI poor people (72%) live in Middle Income Countries.
Changes Over Time: Changes in MPI over time were analyzed for 22 countries and 189 regions covering 2 billion people. Of 22 countries 18 reduced poverty significantly. Most ‘top performing’ countries reduced multidimensional poverty as fast as or faster than they reduced income poverty. Nepal, Rwanda and Bangladesh had the largest absolute reductions in MPI poverty, followed by Ghana, Tanzania, Cambodia and Bolivia. The percentage of poor people in Nepal dropped from 64.7% to 44.2% between 2006 and 2011, 4.1 percentage points per year; in Rwanda, MPI poverty fell by 3.4 percentage points per year during 2005-2010; and in Bangladesh, by 3.2 percentage points per year from 2004 - 2007. At the other end of the scale, Jordan, Peru, Madagascar and Senegal showed no significant reduction in multidimensional poverty.
India reduced MPI poverty significantly between 1999 and 2005-6, but the reduction was uneven across states and social groups, and much slower than in poorer neighbors Bangladesh and Nepal. The MPI poverty fell considerably faster than income poverty but at a rate that was less than one-third of the speed its poorer neighbors Nepal and Bangladesh achieved more recently. The number of MPI poor marginally reduced to 53.7% compared with 55% revealed by in 2010.
No correlation with income poverty ($1.25/day): Among the 16 countries for which comparison was possible, Nepal and Malawi reduced the incidence of both multidimensional and income poverty at roughly the same absolute rate. For the other countries, rates varied; for example, Rwanda, Ghana and Bolivia reduced the multidimensional headcount two to three times faster than the $1.25/day poverty headcount in absolute terms, whereas in Uganda, Cambodia and Ethiopia, reductions in the incidence of income poverty surpassed those in the incidence of MPI poverty.
However, the MPI analysis provides information on non-income deprivations, such as malnutrition, education, water and sanitation which are of human importance.
The Multidimensional Poverty Index is clearly an important tool for the governments. The approach can be applied after choosing suitable indicators relevant for the local conditions. Since paucity of sufficient and more frequent data is the major hurdle in applying the MPI tool, it goes without saying that the data gathering mechanism need fine-tuned so that the MPI analysis can reflect the poverty situation more accurately.
You may also like to Read
- An Introduction to the Human Development and Capability Approach
A comprehensive discussion on development theories
- Background to the MPI
A brief history of the MPI is presented.
- Amartya Sen's Concept of Development and Poverty
Amartya Sen's thesis is simple: expansion of people's freedom increases their well being and contraction leads to deprivation and poverty. Freedom allows expansion of people's capabilities.