Multidimensional Poverty Index
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Multidimensional Poverty Indices use a range of indicators to calculate a summary poverty figure for a given population, in which a larger figure indicates a higher level of poverty. This figure considers both the proportion of the population that is deemed poor, and the 'breadth' of poverty experienced by these 'poor' households, following the Alkire & Foster 'counting method'. The method was developed following increased criticism of monetary and consumption based poverty measures, seeking to capture the deprivations in non-monetary factors that contribute towards well-being. While there is a standard set of indicators, dimensions, cutoffs & thresholds used for a 'Global MPI', the method is flexible and there are many examples of poverty studies that modify it to best suit their environment. The methodology has been mainly, but not exclusively, applied in developing countries.
The Global Multidimensional Poverty Index (MPI) was developed in 2010 by the
Multidimensional Poverty Indices typically use the household as their unit of analysis, though this is not an absolute requirement. A household is deprived for a given indicator if they fail to satisfy a given 'cutoff' (e.g. having at least one adult member with at least 6 years of education). A household is assigned a 'deprivation score' determined by the number of indicators they are deprived in and the 'weights' assigned to those indicators. Each dimension (Health, Education, Standard of Living, etc.) is typically given an equal weighting, and each indicator within the dimension is also typically weighted equally. If this household deprivation score exceeds a given threshold (e.g. 1/3) then a household is considered to be 'multiply deprived', or simply 'poor'. The final 'MPI score' (or 'Adjusted Headcount Ratio') is determined by the proportion of households deemed 'poor', multiplied by the average deprivation score of 'poor' households.
MPI advocates state that the method can be used to create a comprehensive picture of people living in poverty, and permits comparisons both across countries, regions and the world and within countries by ethnic group, urban/rural location, as well as other key household and community characteristics. MPIs are useful as an analytical tool to identify the most vulnerable people - the poorest among the poor, revealing poverty patterns within countries and over time, enabling policy makers to target resources and design policies more effectively. Critics of this methodology have pointed out that changes to cutoffs and thresholds, as well as the indicators included and weightings attributed to them can change MPI scores and the resulting poverty evaluation.
The Global MPI uses three standard dimensions: Health; Education; Standard of Living. These mirror the
Multidimensional Poverty Indices used for purposes other than global comparison have sometimes used different dimensions, including income and consumption.