Exploring Global Poverty Using the Multidimensional Poverty Index (MPI)
Poverty Perspective Is Shifting Towards Multidimensionality
In the traditional perspective poverty is seen from monetary viewpoint – as income deficiency. So, monetary poverty lines are popular all over the world. The World Bank use $1.90 per day per person poverty line to measure extreme poverty; it used to be $1.25 before October 2015. Such poverty lines are awfully simplistic and draw a black and white picture of human suffering labeled ‘poverty.’ How many people get counted as poor depends upon where you set the poverty boundary.
Such one dimensional poverty lines see people as mere numbers; they only point to ‘poverty’ but tell nothing about the ‘poor’ and their suffering. An income poverty line is also blind to factors that push people into poverty or sustain it. Thus, critics see it as a convenient statistical number game of economists who are more concerned with GDP growth than people’s well-being.
Now poverty is widely recognized as a state of multidimensional deprivations faced by the poor. It means shifting the focus from poverty to the poor. The pivotal Sustainable Development Goals (SDG) document, Transforming Our World: The 2030 Agenda for Sustainable Development, stated: ‘We recognize that eradicating poverty in all its forms and dimensions, including extreme poverty, is the greatest global challenge and an indispensable requirement for sustainable development.’
Discussions leading up to the SDGs highlighted the need for new poverty measures, which would reflect the multidimensional nature of poverty. In December 2014, the UN Secretary General Ban Ki Moon wrote, ‘Poverty measures should reflect the multidimensional nature of poverty’. A UN Assembly Resolution of 2014 also underlined the need to better reflect the multidimensional nature of development and poverty. It urged developing complementary measurements – ‘that better reflect that multidimensionality.’
Thus, non-monetary poverty measures are needed to not only better understand ‘poverty’ as a concept but also to gain deeper insight into the life of the ‘poor’ seen as people. If the one dimensional income poverty line is economic oriented, the Multidimensional approach is human oriented.
The Multidimensional Poverty Index (MPI)
The multidimensional poverty index (MPI), launched in 2010 by the UNDP and the UK-based Oxford Poverty and Human Development Initiative (OPHI), presents a multidimensional poverty measure. It is an elaborate tool to map the shades and depth of poverty. The MPI complements the income poverty measures with direct measure of deprivations, and provide a better insight into people's suffering. It reveals vital information on who is poor and how they are poor. The MPI reflects the mindset – why poverty, let’s talk people’s development!
The MPI can be used as an analytical tool to spot the most vulnerable people and to identify different patterns of deprivations – clusters of deprivations that are common among different countries or groups. It can specifically point out in which aspects they are deprived and how different deprivations are interconnected. It can identify poverty traps and consequently strengthen the impact of interventions required to meet the SDGs.
The MPI information can be broken down by social groups and geographical areas to reveal poverty patterns within countries – and by indicators to show which deprivations drive poverty in different regions. It can also be used to track changes in deprivations over time.
The MPI approach can be applied using indicators and weights to create a poverty measure that is more relevant to a region or country. Being specific, each indicator points to a clear policy intervention. Taken together, a complete spectrum of people’s ‘lack of well-being’ – that we call poverty – emerges. This allows policymakers to design more effective and highly targeted anti-poverty programs. Being people oriented, the MPI also offers a convincing argument for the presence of poverty in affluent countries.
The global MPI is a new generation of multidimensional measure that supports key priorities in the Sustainable Development Goals (SDGs) as shown in the image here. As opposed to the conventional focus on income or consumption, the MPI approach stresses on increasing capabilities of the poor masses as envisaged by Amartya Sen in his capabilities theory of development.
What Constitutes The MPI?
The Multidimensional Poverty Index (MPI) presents a ‘high-resolution’ image of poverty. It directly measures the nature and magnitude of overlapping deprivations for each household in three dimensions – health, education and living standard using 10 indicators.
The dimension of health is monitored through two indicators: nutrition and child mortality. The status of education is judged by two indicators: years of schooling and school attendance. The living standard is measured by six indicators: cooking fuel, improved sanitation, safe drinking water, electricity, flooring and asset ownership.
The MPI is the simple product of ‘incidence’ (H) and ‘intensity’ (A): MPI = H x A
• Incidence (H) is the headcount ratio or proportion of people who are poor (or the ‘poverty rate’). For example, in Myanmar, 30.1% of people are poor because they are deprived in 33.33% or more of the weighted MPI indicators.
• Intensity (A) is the average deprivation score among the poor. For example, in Myanmar intensity is 44.6 %. It implies that the poor in Myanmar are on average deprived in 44.6% of the weighted indicators.
In the above example, the MPI for Myanmar can be obtained by multiplying 30.1% x 44.6%; you obtain 0.134.
The index value ranges from zero to one - lower values mean lower poverty levels. Clearly, people or households deprived in say 7 indicators are worse off than those deprived in 3 indicators.
Who Is ‘Multidimensionally’ Poor?
Who is MPI poor?
A person is identified as MPI poor if he/she is deprived in at least one third of the weighted MPI indicators as shown in the image on the right. If a person is deprived in 20-33.3% of the weighted indicators he/she is not considered poor, but is seen as ‘Vulnerable to Poverty’, and if deprived in 50% or more indicators, the person is identified as being in ‘Severe Poverty’.
Those identified as the ‘destitute’ are the poorest among the poor. Following the definition of MPI poverty, the destitute people are also deprived in one-third or more weighted indicators, but the destitution indicators are more extreme. They include severe malnutrition, losing two or more children, having a child out of primary school, having no household member who has completed more than one year of schooling, using open defecation, using unsafe water or fetching water from faraway places, not owning even a mobile phone or radio, and cooking with wood or dung or straw only. Almost half of the MPI 2017 poor (706 million) are destitute.
Clearly, they live in highly distressed condition trapped in poverty and hence need urgent attention.
Key Findings of MPI 2017
Here are the key findings from the global MPI 2017:
- Globally, around 1.45 billion people are multidimensionally poor.
- Around half of them are children aged 0–17.
- 48% MPI poor live in South Asia, and 36% in Sub-Saharan Africa.
- Nearly half of all MPI poor (706 million) are destitute; thus, they experience extreme deprivations like severe malnutrition.
- The poorest pockets are in Chad, Burkina Faso, Niger, Ethiopia, South Sudan, Nigeria, Uganda and Afghanistan.
Many countries have adopted the concept of Multidimensional Poverty Indexes (MPI) – Bhutan, Chile, Colombia, Costa Rica, Ecuador, Pakistan, and Mexico.
The tiny Himalayan kingdom, Bhutan rejected GDP as a measure of development long time ago. It follows what it calls the ‘Gross National Happiness’. It is also essentially a multidimensional approach to development which is highly people, society and environmental friendly.
(1) There are more MPI poor than income poor
The 2017 global MPI covers 5.4 billion people, or 76% of the world’s population, living in 103 countries. The MPI 2017 discovered that the world is poorer than implied by income poverty line of $1.90. The MPI 2017 analysis revealed that a total of 1.45 billion or 26.5% of people living in these countries are living in multidimensional poverty. This is more than the recent World Bank estimate of extreme poor (900 million) living within $1.90 per day. When the MPI was first launched in 2010, 1.75 billion people were MPI poor. So, in 7 years 300 million poor people improved their life.
Of these 1.45 billion MPI poor, 48% live in South Asia, and 36% in Sub-Saharan Africa. Most MPI poor people (72%) live in the Middle Income Countries.
Comparing the MPI and income poverty, in South Asia, 41.6% of the population is MPI poor but 19.2% are poor by the extreme income poverty measure of $1.90 a day. So, MPI poverty rate is more than doubled. In Sub-Saharan Africa the MPI poverty affects 60.1% of the population; $1.90/day poverty is 46.4%.
People in rural areas are far more likely to be multidimensionally poor than people in urban areas.
(2) High MPI poverty among children
Half of all multidimensionally poor people – 48% – are children (below 18). This means 689 million children are living in multidimensional poverty. Poor children are on average deprived in 52% of weighted indicators. The most common deprivations children face are in cooking fuel, sanitation, flooring, malnutrition and electricity.
Most MPI poor children live in South Asia (44%) and in Sub-Saharan Africa (43%). Further, in 36 countries including India, at least half of all children are MPI poor. In Ethiopia, Niger and South Sudan over 90% of children are MPI poor.
(3) High level of destitution
Nearly half of all MPI poor (706 million) are destitute; thus, they experience extreme deprivations like severe malnutrition. Acute destitution is found in sub-Saharan Africa, but most of the destitute people – 362 of the 706 million – live in South Asia. India has more destitute people (295 million) than Sub- Saharan Africa (282 million).
There are pockets of destitution even in low MPI countries. In countries like Turkmenistan, Bosnia and Herzegovina, Barbados, Uzbekistan and Azerbaijan, 30% or more of MPI poor people are destitute. But in South Africa, less than 9% of the MPI poor are destitute. Within the Arab States, 58% of people in Sudan’s Central Darfur, and 50% of people in Yemen’s Hajjah regions are destitute.
In general, destitution rates tend to be lower than $1.90/day extreme income poverty rates. But destitution is markedly higher than income poverty in Pakistan, Mauritania, Sudan, Gambia, Chad, Ethiopia, Niger, and South Sudan. This underscores the importance of measuring and fighting poverty in all its forms and dimensions.
There are countries and regions, where destitution affects over half of the population. Six countries have more than 50% of their population living in destitution – and together they are home to 100 million poor people. There are many more such examples. These figures call for vigorous efforts to fight destitution particularly in South Asia and Sub-Saharan Africa
(4) High Sub-National Diversity
The MPI and its indicators are disaggregated by 988 sub-national regions in 78 countries, revealing an astonishing sub-national diversity. The poorest regions are in Chad, Burkina Faso, Niger, Ethiopia, South Sudan, Nigeria, Uganda and Afghanistan.
Inside Afghanistan poverty rates vary from 25% in Kabul to 95% in Urozgan. In Chad it’s 53–99%. In Nigeria the range is a massive 8–92%, always with capital cities having the lowest MPI poverty. These numbers clearly suggest highly uneven national development.
In South Asia, Afghanistan is also the most MPI poor nation – 56% of Afghanis are acutely MPI poor. Afghanistan’s poorest region, Urozgan, in central Afghanistan, has 95% MPI poverty. It has an MPI of 0.624, which is larger than the national MPI of Niger.
(5) No correlation with $1.90/day Income Poverty
For most countries, the income poverty rate is lower than the MPI poverty. But many poor countries have the reverse trend; for example, DR Congo, Madagascar, Rwanda, Zambia, Malawi, Togo etc. Some low MPI countries also show this trend. Most notable is Uzbekistan where the income poverty is around 65% but MPI poverty is less than 5%. It could be due to high focus on people’s well being than GDP growth. Armenia is another example but the difference is very small.
Homelessness in Rich Countries!
As of 2012 there were 633,000 homeless people in the United States and 284,000 in Germany.
Limitations of the MPI
Lack of relevant and comprehensive data is the first and foremost limitation of the MPI. Not all countries keep comprehensive and more frequent data on poverty. 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 generally 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.
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.
The Multidimensional Poverty Index is clearly an important step towards seeing poverty from a human perspective. If the income poverty line sees the poor as mere numbers, the MPI focuses on various deprivations they are going through. It also emphasizes the urgent need to look at poverty beyond lack of income. The MPI framework offers an ideal tool to design effective anti-poverty programs.
Since paucity of sufficient and more frequent data is the major hurdle in using the MPI tool, the data gathering mechanism needs fine-tuning.
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