Multidimensional Poverty Index

Multidimensional Poverty Indices help us understand poverty by looking at many different parts of life, not just money. They use information about health, education, and living conditions to show how hard life is for people in a community. This way of measuring was created because just using money does not tell the whole story about how well someone is doing.

The Global Multidimensional Poverty Index started in 2010 by the Oxford Poverty & Human Development Initiative and the United Nations Development Programme. It is used to measure deep poverty in over 100 developing countries. Each year, the results are shared with the Human Development Index in the Human Development Report.

This index looks at whole households to see if they are missing important things, like educated adults or good health services. By studying these patterns, leaders can learn who needs help the most and plan ways to make lives better. However, some people think that the details measured and how they are weighted can change what the index shows about poverty.

Dimensions and indicators

The Global MPI looks at three main areas: Health, Education, and Standard of Living. It uses ten signs to measure poverty in these areas. These signs are like those used in the Human Development Index.

Other studies using Multidimensional Poverty Indices might look at different areas, like income, depending on the data and what the researchers are studying. The Global MPI has specific rules for what counts as poverty in each area.

Calculation

The Alkire-Foster 'counting method'

The Alkire-Foster method is a way to measure many parts of poverty at once. It was made by Sabina Alkire and James Foster. This method looks at different problems people face together, like not having enough education or a good job, or poor health. It helps us see who is poor and how deep their poverty is.

Constructing poverty measures

Usually, we measure poverty by looking at how many people are poor, called the headcount ratio (H). The Alkire-Foster method goes further. It creates special measures (Mα) that show more than just the number of poor people. Three important measures are:

• Adjusted headcount ratio (_M_0): This shows how many people are poor and how deep their poverty is. It is found by multiplying the headcount ratio (H) by the intensity of poverty (A).
• Adjusted Poverty Gap (M1): This shows how many people are poor, how deep their poverty is, and the average gap between their situation and the poverty line.
• Adjusted Squared Poverty Gap (M2): This also shows inequality among poor people.

M0 is the most used measure because it works with different types of data. The other measures need more detailed data.

The Alkire-Foster method is special because it can show how bad poverty is for different groups at the same time.

Fictional example

Imagine a country with three people: A, B, and C. We look at ten different things that might be lacking for each person. The table below shows these results.

For this country, we find two important numbers:

• Factor H is how many people are poor: 0.667.
• Factor A is the average depth of poverty: 0.417.

The multidimensional poverty index (MPI) for this country is found by multiplying these two numbers: 0.278.

Comparisons with other indicators

The Human Development Index (HDI) was created in 1990 by Mahbub ul Haq and Amartya Sen and was also developed by the UNDP. It looks at health, education, and standard of living.

Both the HDI and the Multidimensional Poverty Index (MPI) look at health, education, and standard of living. The HDI uses overall country data, while the MPI uses detailed information from surveys. Some people say the HDI doesn’t tell the whole story because it mainly focuses on a country’s wealth.

Impact of COVID-19

The COVID-19 pandemic affected education, jobs, and support for people in countries with higher levels of multidimensional poverty, like Zambia. School closures made it harder for children to attend school.