An Absolute Multidimensional Poverty Measure in the Functioning Space (and Relative Measure in the Resource Space): An Illustration Using Indian Data

Abstract

In this paper we develop a multidimensional poverty measure that attempts to capture absolute poverty in the functioning space. As suggested by Sen, if the measure aims to be absolute in the functioning space, it needs to be relative in the resource space. To generate a relative measure, this measure adapts the poverty cut-off in resource-related indicators in a multidimensional poverty measure to prevailing standards in a region. As illustration, this poverty measure utilizes the Indian Demographic and Health Survey (DHS) and is based on UNDP's global Multidimensional Poverty Index (MPI). Similar to the global MPI, we apply the Alkire-Foster dual cut-off approach (Alkire and Foster, 2011a) and broadly follow the global MPI in the choice of indicators, weights, and overall cut-off. However, adaptable indicator thresholds are considered when appropriate. We argue that global MPI indicators in the health dimension are not open to a relative assessment, as they reflect specific health functionings (i.e. being free from premature mortality and being well nourished). In the education and standard of living dimensions, we set indicator thresholds at the median of the reference population, while experimenting with different reference populations. Empirically we find that the overall ranking of poverty in India does not change using our relative MPI, but the differentials in poverty are substantially smaller between states and rural and urban areas, also depending on the choice of the reference population.

Multidimensional poverty in South‐West Nigeria: Empirical insights from a household survey in Osun State

“…For this study, a cut‐off of is selected. This decision is informed by Dotter and Klasen (2014) who buttressed their MPI with a cross‐dimensional cut‐off: . Hence, in this study, a household is multidimensionally poor, if its weighted deprivations sum to or more.…”

Poverty Research and its Discontents: Review and Discussion of Issues Raised in Dimensions of Poverty. Measurement, Epistemic Injustices and Social Activism(Beck, V., H.Hahn, and R.Lepenies eds., Springer, Cham, 2020)

“…While it introduces a relative element, its calculation is mechanistic and simply derived from a country’s median consumption level, without asking if what people can consume at the resulting level is sufficient for some socially acceptable minimum standard. The chapter by Dotter and Klasen (2020) makes a similar proposal; they develop a multidimensional poverty measure that is relative in that it adapts poverty cut‐offs for dimensions such as education and living standards to prevailing standards in a region. This way, their poverty measure “can account for varying needs across countries due to different environments, customs and culture” (p. 227).…”

Poverty in Multidimensional Perspective: Policy Insights from Selected North Indian Districts

“…The fundamental logic is: ‘since growth can’t reduce poverty to the desired level, policy attention needs to focus on health and education’ (Bhagwati & Panagariya, 2012). While health is an enabling factor and education is a signalling device of ability or productivity, standard of living is the basis of decent living and source of social acceptance (Dotter & Klasen, 2014). Hence, the measures of multidimensional poverty include people who may not be income poor, but face deprivations in other areas of their lives (Alkire & Foster, 2011b).…”