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Multidimensional Poverty Index (MPI)

Multidimensional Poverty Index (MPI)

  • MPI is a new measure introduced in the HDR, 2010 designed to capture different deprivations being faced by people at the same time. Thus, MPI identifies multiple deprivations at the household level in health, education and standards of living.
  • The MPI reflects both the incidence of multidimensional deprivation, and its intensity—how many deprivations people experience at the same time.
  • It 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 or rural location, as well as other key household and community characteristics.
  • More than 15% of world’s people remain vulnerable to Multidimensional poverty.
  • MPI uses 10 indicators and a household is counted poor if it is deprived in 3 or more of these areas (about 33%).

These 10 indicators classified in three categories are:

  1. Health indicators : (i) Nutrition (ii) Child-Mortality
  2. Education Indicators: (iii) Years of Schooling; (iv) Children Enrolled
  3. Standard of Living Indicators: (v) Cooking Fuel (viii) Electricity (vi)Toilet (ix) Floor (vii) Water (x) Assets
  • MPI is claimed to be a better index than HPI to measure poverty. HPI uses country averages to reflect aggregate deprivations in health, education and standard of living. It could not identify specific individuals or households as jointly.    Multidimensional Poverty Index (MPI)
  • MPI addresses the above shortcomings by capturing how many people experience overlapping deprivations (Incidence of Poverty) and how many deprivations they face on average (Intensity of Poverty).
  • The MPI can also be broken down by indicator to show how the composition of multi dimensional poverty changes for different regions, ethnic groups, rural or urban areas etc. This will have useful implications for economic policies.
  • One deprivation alone may not represent poverty The MPI requires a household to be deprived in multiple indicators at the same time. A person is multidimensionally poor if the weighted indicators in which he or she is deprived add up to at least 33%.
  • Income could not be included as one of the variables in calculating MPI due to data limitations. Income poverty data come from different surveys, and these surveys often do not have information on health and nutrition. For most countries we are not able to identify whether the same people are income poor and also deprived in all the MPI indicators so could not include income.
  • MPI calculations are based on three main data sets: The Demographic and Health Survey (DHS), the Multiple indicators Cluster Survey (MICS) and the World Health Survey (WHS).
  • The MPI, like the $1.25 per day line, is a globally comparable measure of poverty. It measures acute multidimensional poverty, and only includes indicators that are available for many countries. National poverty measures are typically monetary measures, and thus capture something different.
  • The fact that there are differences does not mean that the national poverty number, or the MPI headcount is wrong—these simply measure different conceptions of poverty.
  • At the same time, just as national poverty measures, in contrast, are designed to reflect the domestic situation more accurately and often differ in very useful ways from the $1.25 measure, some countries may wish to build a national multidimensional poverty index that is tailored to their context, to complement this international MPI.  Multidimensional Poverty Index (MPI)
  • The MPI indicators are drawn from the Millennium Development Goals (MDGs) as far as the available internationally comparable data allow.
  • The 10 indicators of the MPI are identical, or relate, to MDG indicators: nutrition (MDG 1), child mortality (MDG 4), access to drinking water (MDG 7), access to sanitation facility (MDG 7) and use of an improved source of cooking fuel (MDG 9).
  • The overall MPI can be broken down into its constituent parts, revealing the overlapping needs of families and communities across a range of indicators which so often have been presented in isolation. This helps policymakers to see where challenges lie and what needs to be addressed.
  • The MPI has some drawbacks, due mainly to data constraints.
  • First, the indicators include both outputs (such as years of schooling) and inputs (such as cooking fuel) as well as one stock indicator (child mortality, which could reflect a death that was recent or long ago), because data are not available for all .
  • Second, the health data are relatively weak and overlook some groups’ deprivations especially for nutrition, though the patterns that emerge are plausible and familiar.
  • Third, in some cases careful judgments were needed to address missing data. But to be considered multidimensionally poor, households must be deprived in at least six standard of living indicators or in three standard of living indicators and one health or education indicator.This requirement makes the MPI less sensitive to minor inaccuracies.
  • Fourth, intra­-household inequalities may be severe, but these could not be reflected.
  • Fifth, while the MPI goes well beyond a headcount to include the intensity of poverty experienced, it does not measure inequality among the poor, although decompositions by group can be used to reveal group-based inequalities.  Multidimensional Poverty Index (MPI)
  • Finally, the estimates presented here are based on publicly available data and cover various years between 2000 and 2010, which limits direct cross-country comparability.

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