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Is the MPI a Better Measure of Poverty?

Is the MPI a Better Measure of Poverty Metrics
Experts from the Oxford Poverty and Human Development Initiative (OPHI) are urging members of the United Nations to adopt a multidimensional poverty index (MPI) that could present a more distinctive picture of global poverty. For each individual or family, the MPI collates economic data along with information related to health, education, and living standards. This information is then used to assess where people are experiencing deprivation of basic needs, which determines their overall level of poverty.

Director of OPHI, Sabina Alkire, says that the MPI provides a measure of poverty that will answer not only who is poor but also why they are poor. “The real value of multidimensional measures is not having one number,” Alkire told The Guardian, “but it is that we can bring that number to bear…in different ways to understand poverty and trends in reduction over time.”

The current extreme poverty threshold—developed by the World Bank and used by the United Nations—is $1.25 per person per day. This number is thought to reflect an amount that each person needs to maintain his or her basic needs. But many activists believe that $1.25 per day is hardly enough to address basic needs. A report released by Action Aid suggests that $10 per day is a more realistic threshold and also points out that the number of people living on less than $10 per day has actually increased by 25% since 1990.

Though countries may be making progress with regard to the Millennium Development Goals, questions remain whether $1.25 per day reflects a proper poverty threshold. While some individuals may earn more than that amount, they may not have access to healthcare, education, or shelter. Failing to account for these factors creates an inaccurate portrait of global poverty.

There also appears to be a disparity between the UN’s threshold for extreme poverty and the perception of people actually living in poverty. In a meeting with UN officials, OPHI researchers reported that nearly 60 percent of Nigerians are in poverty, using the $1.25 per day threshold. But when asked their opinions, an astounding 95 percent of Nigerians said they were living in poverty. Such disconnects reveal that certain elements of poverty are not being accounted for with current measurements.

Eradicating extreme $1.25-per-day-poverty is a fair goal and developing countries should continue striving to achieve the MDGs. But with 2015 quickly approaching, the United Nations and the World Bank will be exploring new ways to define poverty and refine their stated development goals. That being said, the MPI is a likely candidate to replace the current poverty threshold.

– Daniel Bonasso

Sources: The Guardian, OPHI
Photo: Photopin