Multi-dimensional Poverty Index

The Multi-Dimensional Poverty Index (MPI) is a comprehensive measure of poverty that goes beyond income-based assessments to capture the multiple deprivations faced by individuals and households in their daily lives. Developed by the Oxford Poverty and Human Development Initiative (OPHI) in collaboration with the United Nations Development Programme (UNDP) in 2010, the MPI provides a broader understanding of poverty by examining indicators related to health, education, and living standards.
Unlike traditional monetary measures such as income or consumption poverty, the MPI identifies how people are poor — in what specific areas they are deprived — and to what extent these deprivations affect their overall well-being.

Background and Development

The concept of multi-dimensional poverty is rooted in the Capability Approach proposed by Amartya Sen, which argues that poverty should be viewed as a deprivation of basic capabilities rather than merely a lack of income.
The MPI was first introduced in the UNDP Human Development Report (HDR) 2010, replacing the earlier Human Poverty Index (HPI). It provides a more accurate and policy-relevant picture of poverty by integrating various non-monetary dimensions that affect quality of life.

Definition

The Multi-Dimensional Poverty Index (MPI) measures the proportion of people who are multi-dimensionally poor and the intensity of their poverty, i.e., how many deprivations they experience simultaneously.
Mathematically,
MPI=H×A\text{MPI} = H \times AMPI=H×A
where:

• H (Headcount Ratio): The proportion of the population that is multi-dimensionally poor.
• A (Intensity of Poverty): The average proportion of weighted indicators in which the poor are deprived.

This approach captures not just how many people are poor, but how deeply they experience poverty.

Dimensions and Indicators of MPI

The global MPI comprises three key dimensions — Health, Education, and Standard of Living — which are further represented by 10 indicators. Each dimension is equally weighted, and within each dimension, indicators carry equal weights.

A person is identified as multi-dimensionally poor if their weighted deprivation score is 33% or more across these indicators.

Interpretation

• MPI Value: Ranges from 0 to 1, where 0 means no one is deprived and 1 indicates everyone is deprived in all indicators.
• Headcount Ratio (H): Indicates the percentage of people who are poor.
• Intensity (A): Measures the average share of deprivations poor people experience.

For example, an MPI of 0.250 means that poor people experience, on average, 25% of total possible deprivations.

Global MPI 2024 Overview

As per the UNDP–OPHI Global Multidimensional Poverty Index 2024:

• About 1.1 billion people (nearly one in six worldwide) live in multi-dimensional poverty.
• The highest poverty levels are concentrated in Sub-Saharan Africa and South Asia.
• Children under 18 years constitute nearly half of all multidimensionally poor people globally.

India’s Performance in MPI

India has shown remarkable progress in reducing multi-dimensional poverty over recent years.

• According to the Global MPI 2023 report, India reduced multidimensional poverty by over 415 million people between 2005–06 and 2019–21.
• The share of multi-dimensionally poor people fell from 55.1% in 2005–06 to 16.4% in 2019–21.
• Deprivations declined across all dimensions, particularly in nutrition, sanitation, and access to electricity.
• The National MPI, developed by NITI Aayog in 2021, uses a methodology aligned with the global MPI to track poverty reduction at the state and district levels.

Top-performing States (India’s MPI 2021–22):

• Kerala, Goa, and Sikkim recorded the lowest MPI values.
• Bihar, Jharkhand, and Uttar Pradesh recorded the highest MPI values.

Significance of MPI

The Multi-Dimensional Poverty Index plays a crucial role in policymaking and social development.
1. Holistic View of Poverty: MPI recognises that poverty is not just about income but also about lack of basic capabilities — health, education, and living standards.
2. Targeted Policy Design: By identifying specific areas of deprivation, governments can design targeted interventions (e.g., education access, nutrition programmes, sanitation initiatives).
3. Monitoring and Evaluation: MPI provides a robust tool for tracking progress toward Sustainable Development Goal (SDG) 1 – No Poverty and related goals such as health (SDG 3) and education (SDG 4).
4. International Comparability: The standardised methodology enables cross-country comparisons of poverty trends and policy outcomes.
5. Regional and Subnational Analysis: National adaptations of MPI allow governments to assess poverty variations within states, regions, and demographic groups.

Differences between Income Poverty and MPI

Limitations of the MPI

While the MPI provides a broader understanding of poverty, it is not without challenges:

• Data Availability: Requires detailed household surveys, which may not be regularly available.
• Comparability Issues: Differences in data quality and survey timing can affect international comparisons.
• Static Nature: Does not measure vulnerability or transitions in and out of poverty.
• Context Sensitivity: Global indicators may not fully capture local realities (e.g., cultural or regional differences in living standards).

National and Regional Adaptations

Several countries, including Mexico, Bhutan, Colombia, and India, have developed National MPIs tailored to their socio-economic contexts. These indices serve as official poverty measures and guide domestic policy planning.
In India, the National MPI (by NITI Aayog) incorporates the same three dimensions and ten indicators as the global MPI but uses national-level data from NFHS surveys to reflect local conditions.