Alkire-Foster Method
The Alkire–Foster Method is a multidimensional approach to measuring poverty and deprivation, developed by Sabina Alkire and James Foster in 2007. Unlike traditional income-based measures, this method evaluates poverty by considering multiple dimensions of human wellbeing, such as health, education, and living standards. It provides a flexible and comprehensive framework for identifying who is poor and how they are deprived, forming the basis for the widely used Global Multidimensional Poverty Index (MPI).
Background and Rationale
Traditional poverty measurement, often based solely on income or consumption, has long been criticised for failing to capture the full range of deprivations experienced by individuals. Economic indicators do not always reflect access to essential services, opportunities, or quality of life.
Drawing on Amartya Sen’s capability approach, which views poverty as the deprivation of basic capabilities rather than merely a lack of income, Alkire and Foster proposed a method that incorporates multiple indicators to assess poverty in a holistic way. This multidimensional perspective allows policymakers to understand not only how many people are poor but also the specific aspects of their deprivation.
Core Concepts
The Alkire–Foster (AF) method identifies poverty through a dual-cutoff approach. It first establishes thresholds for each dimension to determine whether an individual is deprived in that aspect and then applies an overall poverty cutoff to decide whether a person is multidimensionally poor.
The method can be summarised in the following key steps:
- Selection of Dimensions and IndicatorsThe first step is to select relevant dimensions of poverty (such as health, education, and living standards) and corresponding indicators (e.g., nutrition, years of schooling, electricity access). The choice depends on the context, policy objectives, and data availability.
- Setting Deprivation CutoffsFor each indicator, a deprivation threshold is defined. For instance, if a household lacks access to clean drinking water, it is considered deprived in that dimension.
- Identification of Deprivation StatusEach person or household is assessed according to these thresholds to identify where deprivations exist.
- Weighting of DimensionsEach dimension and indicator is assigned a weight reflecting its relative importance. Typically, equal weighting is used unless there is a policy justification for differentiation.
- Counting DeprivationsFor each individual or household, the number (or weighted sum) of deprivations is calculated.
- Poverty Cutoff (k)A second cutoff, denoted k, determines the minimum number or share of deprivations required for a person to be considered multidimensionally poor. For example, a household might be defined as poor if it is deprived in at least one-third of the weighted indicators.
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Aggregation and Index ConstructionOnce individuals identified as poor are determined, two key measures are calculated:
- Headcount Ratio (H): The proportion of the population that is multidimensionally poor.
- Intensity (A): The average proportion of deprivations experienced by poor individuals.
These two measures are combined to produce the Multidimensional Poverty Index (M₀ = H × A).
Mathematical Representation
If n represents the number of people and d the number of dimensions, the Alkire–Foster methodology can be expressed as:
- A deprivation matrix is constructed, where each cell indicates whether a person i is deprived in dimension j.
- Each dimension is assigned a weight wₙ, with the total weight summing to 1.
- The weighted deprivation score for each person cᵢ is computed.
- A person is identified as poor if cᵢ ≥ k, where k is the chosen poverty cutoff.
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Aggregation then proceeds to compute:
M0=H×AM_0 = H \times AM0=H×A
where:- H=q/nH = q/nH=q/n (proportion of the population that is multidimensionally poor)
- A=∑i=1qci/qA = \sum_{i=1}^{q} c_i / qA=∑i=1qci/q (average share of deprivations among the poor)
Advantages of the Alkire–Foster Method
The AF method has several advantages over traditional unidimensional approaches:
- Multidimensional insight: Captures multiple aspects of poverty simultaneously.
- Decomposability: Results can be broken down by region, population group, or indicator to identify priority areas for intervention.
- Policy relevance: Enables governments to design targeted policies addressing specific deprivations, such as education or health.
- Flexibility: Dimensions and weights can be adapted to suit national or regional priorities.
- Transparency: The dual-cutoff process clearly shows who is poor and why, enhancing accountability in policy design.
Applications and Global Adoption
The Alkire–Foster methodology underpins numerous national and international poverty assessments:
- The Global Multidimensional Poverty Index (MPI), published by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI), applies the AF method to compare poverty across countries.
- Several nations, including Mexico, Colombia, Bhutan, and Nepal, have developed national MPIs based on the AF framework, tailoring indicators to their own development priorities.
- The approach has also been used in thematic analyses, such as measuring child poverty, urban deprivation, and multidimensional inequality.
Criticisms and Limitations
Despite its influence, the Alkire–Foster Method is not without criticism:
- Indicator selection: The choice of dimensions and indicators may be subjective or politically influenced.
- Weighting issues: Equal weights are often applied for simplicity, which may not reflect real-world importance.
- Data constraints: Reliable data on all dimensions are not always available, particularly in low-income countries.
- Dynamic poverty: The method captures poverty at one point in time, though efforts have been made to adapt it to track changes longitudinally.
Nonetheless, these challenges are often outweighed by the method’s capacity to produce actionable insights and guide evidence-based policymaking.
Significance in Development Policy
The Alkire–Foster Method has transformed how governments and international organisations understand and address poverty. By shifting the focus from income to multidimensional deprivation, it has broadened the scope of human development assessment.
In policy terms, it enables:
- Targeted resource allocation, by identifying the most deprived regions or groups.
- Monitoring progress towards Sustainable Development Goal 1 (No Poverty).
- Comprehensive social policy design, ensuring that no single aspect of wellbeing is overlooked.
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