The Multiple Dimensions of Poverty

Muraho,

UNDP just introduced a new poverty measure in its 2010 Human Development Report.   The new measure, dubbed Multidimensional Poverty Index (MPI,) measures deprivations of 10 key areas  in health, education, and standard of living.  A household is considered to be multidimensionally poor if they are deprived of six standard of living indicators or three standard of living indicators and one health or education indicator.  A bit confusing, right?  Stay with me, I'll try to explain.

Components of Multidimensional Poverty Index

Human Development Report 2010

This is vastly different from traditional measures of poverty, such as daily income, which is valuable in its own right, but isn't as robust.  Income poverty measures infer a household's poverty based upon their monetary income.  MPI attempts to directly measure who is suffering from symptoms of poverty, which symptoms they are suffering from, and the intensity of those symptoms.  As such, the measures don't always agree and in fact diverge  in their headcount estimates of poverty.  For example, income based poverty measurements estimate that 39  percent of Ethiopians are extremely poor (live on less than $1.25/day).  While, the Multidimensional Poverty Index estimates that 90 percent of Ethiopians experience extreme poverty in some form or another.  That's a dramatic difference (51%)  and it certainly paints a different picture of poverty in Ethiopia.  However, the reverse is true as well.  MPI poverty estimates in other countries, such as Tanzania and Uzbekistan, are actually lower than the income based poverty estimates.  This indicates that less people may be experiencing extreme poverty than their income would suggest.

Comparing Multidimensional and Income Poverty

Human Development Report 2010

The divergence is logical because the two measures cover different concepts and thus should not be expected to mirror one another.  The different estimates suggests that the resources/services measured by MPI may be free or cost less in some countries, while they are expensive or out of reach in others.  It follows then, that countries that offer more access to resources/services (likely through government supported social services) have lower instances of multidimensional poverty. 

So after all of this, you're probably wondering why this new data set is important.  Sure, it's an interesting measure, but how does it translate to transformation on the ground?  Well, MPI should supplement the traditional measures by providing a more comprehensive view of poverty.  Poverty is a complicated concept and it affects populations in varied ways.  MPI's true value lies in its ability to deliver a more precise and holistic view of poverty in specific locales.  Policy makers, donors, aid specialists, and especially entrepreneurs can then use this data to develop targeted measures that can alleviate specific dimensions poverty. I hope that this was helpful.  If you're interested in learning more, check out the entire 2010 Human Development Report.

Turongera,

Chris