Multidimensional Poverty Index

Poverty is multidimensional. It extends beyond money incomes to education, health care, political participation and advancement of one’s own culture and social organization.

The major issue with the simplistic one-dimensional approach to the poverty line measures is that it reduces to consumption expenditure alone and does not tell anything about the nature of poverty. Being poor is being poor in capabilities and not in income only. If the freedom and capabilities of poor are enhanced, they can come out of poverty on their own by eliminating deprivations.

Further, when poverty is seen as an income issue, it seems that economic growth can only eradicate it. But, it has been seen that economic growth alone is not sufficient to eradicate all poverty. In this context, the ideas of Amartya Sen are worth note here.

In his book Development as Freedom, Amartya Sen offered a comprehensive approach to development, regardless if it is a rich or poor society because there is always scope for expansion of freedom and capabilities. For example, the US need to “develop” further by expanding the freedoms of the black and Hispanic by eliminating discrimination, promote drug, arms, violence and terror free society, and expand people’s capabilities by encouraging higher education. It also needs to promote good health to eliminate what is called lifestyle diseases of the rich and improve capabilities of its 15% poor.

Similarly, for sub-Saharan Africa, development should mean galvanizing economic and industrial growth and ensuring freedom from hunger and malnutrition. For a large democracy like India, development should focus on removing economic, social and gender inequalities and providing universal education and food security.

Thus, in last two decades, a new perspective has emerged which says that poverty must be seen in a more comprehensive manner as a lack of human development. Economic growth is certainly important, but only as a tool and not as an end in itself. According to this thinking, poverty is not just “low consumption”. It can cause early death, chronic under nourishment, illness and illiteracy. Unemployment is yet another deprivation because it contributes to social exclusion…to losses of self-reliance, self-confidence and psychological and physical health. Thus, Poverty is multidimensional. It extends beyond money incomes to education, health care, political participation and advancement of one’s own culture and social organization.

Thus, poverty is a state of deprivation which has multiple dimensions. Trying to measure it in terms of income alone is grossly inadequate. The poor are in fact deprived of capabilities which may originate from several sources: personal, social and political. It can only be measured using some multidimensional approach, for example the multidimensional poverty index (MPI).

Multidimensional Poverty Index (MPI)

The UNDP views poverty as a state of multiple deprivations and measures it with a multidimensional poverty index (MPI). This approach recognizes that the poor experience several forms of deprivation for example poor health, lack of education, inadequate living standard, lack of income, social exclusion, disempowerment, poor quality of work and lack of security from exploitation and violence etc. etc.

Thus, UNDP assesses three vital dimensions of poverty viz. education, health, and living standard – through ten indicators and provides both the extent and nature of simultaneous deprivations people are facing.  It uses micro data from household surveys, as basis of deprivation of Cooking fuel, Toilet, Water, Electricity, Floor, Assets.  Each person in a given household is classified as poor or non-poor depending on the number of deprivations his or her household experiences. These data are then aggregated into the national measure of poverty.

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