Multidimensional Poverty Index

Multidimensional Poverty Indices help us understand poverty by looking at many different aspects of life, not just money. They use information about health, education, and living conditions to create a picture of how hard life is for people in a community. This method was developed because simply measuring poverty by money does not tell the whole story about someone's well-being.

The Global Multidimensional Poverty Index was created 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 along 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 having educated adults or good health services. By studying these patterns, leaders can better understand who needs help the most and plan ways to improve lives. However, some people think that depending on which details are 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 specific signs to measure poverty in these areas. These signs are similar to those used in the Human Development Index.

Other studies that use Multidimensional Poverty Indices might choose different areas, like income or consumption, depending on the data available and what the researchers are studying. The ten signs used in the Global MPI have set 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 to measure how well people are doing.

Both the HDI and the Multidimensional Poverty Index (MPI) look at health, education, and standard of living. But the HDI uses overall country data, while the MPI uses detailed information from surveys. Because of this, the MPI can only be calculated for about 100 countries where all the needed data is available, whereas the HDI can be used for almost every country. However, some people say the HDI doesn’t tell the whole story because it mainly focuses on a country’s wealth and misses other important details about people’s lives.

Both the HDI and MPI have been questioned for not including things like feelings of happiness or moral well-being, which some try to measure with indexes like the Global Happiness Index.

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 around the world made it harder for children to attend school. During the first year of the pandemic, there was a 50% risk that children would miss a lot of school because of these closures.