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A New Measure of Poverty: MPI

mpi

When it comes to creating policies that aim to lift people out of poverty, it is often only monetary measures, such as income or a country’s per capita GDP, that are considered. In the last few years, however, members of the Oxford Poverty and Human Development Initiative (OPHI) and the U.N. Development Program (UNDP) created a Multidimensional Poverty Index (MPI) that identifies broader poverty “deprivations,” such as health, education, shelter and access to clean water among others, as a way to help policy makers create more effective poverty reduction programs.

Using micro-data collected from household surveys, MPI is a complement data set for already established income-based poverty measures. It was published for the first time in the 2010 UNDP Human Development Report.

In recent data, OPHI showed that 1.6 billion people are considered to be “MPI-poor,” with 85 percent from rural areas where development continues to be a work in progress.

MPI factors are drawn from basic standard of living indices and overlap with the already established Millennium Development Goals (MDG) including: nutrition (MDG 1,) child mortality (MDG 4,) access to drinking water (MDG 7,) access to sanitation facilities (MDG 7) and access to improved cooking oils (MDG 9). MPI classifies a person as multi-dimensionally poor when a 
household is deprived of at least six standard of living indicators or of three standard of living
 indicators and one health or education indicator.

By including other factors besides income, the MPI shows where the poor are deprived most in order to reveal interconnections that can help policymakers create and implement more effective poverty programs within their populations.

Talking about why the MPI was created, Dr. Sabina Alkire, OPHI Director and one of the creators of the Alkire Foster method, stated that “Poverty and well-being are multidimensional concepts that involve all aspects of a person’s experience of life.” Using factors beyond just income measures allows for a more nuanced understanding of a country’s population’s needs.

The first country to use the MPI measure was Mexico in 2009, which used factors such as health, housing, education, access to food and income to formulate a national poverty initiative.

In 2011 Colombia became the first country to use the Alkire Foster method, a method developed by OPHI, that assesses poverty in five dimensions: household education, childhood and youth conditions, access to household utilities and living conditions, child labor conditions and labor and health. Using this as a base to launch a national poverty reduction policy, the Colombian government set a goal to reduce multidimensional poverty from 35 percent of the entire population in 2008 to 22 percent in 2014.

As leaders begin to formulate the post-2015 MDG agenda, the MPI indices should be included in the data sets in order to help nations and world leaders understand a more complete picture of poverty throughout the world.

— Andrea Blinkhorn 
Sources: Devex, Voice of America, Human Development Reports, OPHI 1, OPHI 2
Photo: The Guardian

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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

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World Poverty Declines Rapidly

World Poverty Declines RapidlyOxford University’s poverty and human development initiative published a world poverty report.  As world poverty declines, the report notes that “never in history have the living conditions and prospects of so many people changed so dramatically and so fast.”  In fact, if some countries continue to improve at current rates, it is possible to eradicate acute poverty within 20 years.

The academic study measured new deprivations, such as nutrition, education, and health. By examining more than income deprivation, the study is able to convey the bigger picture.  The new methodology is entitled to the Multidimensional Poverty Index (MPI).  Past studies identify income as the only indicator of poverty.  This is a misrepresentation because multiple aspects constitute poverty.

The MPI measures poor health, lack of education, inadequate living standards, lack of income, disempowerment, poor quality of work, and threats from violence.  These factors provide a holistic look as world poverty declines.

Dr. Sabina Alkire and Dr. Maria Emma Santos developed the new system.   They named the system “multidimensional” because it is what people facing poverty describe.  “As poor people worldwide have said, poverty is more than money,” Alkire said.

This increased information and understanding better inform international donors and governments.  “Maybe we have been overlooking the power of the people themselves, women who are empowering each other, civil society pulling itself up,” Alkire said.  The new data could incentivize donors to provide assistance.  International and national aid contribute to declining rates.  Improvements to infrastructure, education, and healthcare help decrease poverty rates.  Trade has improved the economies of Ethiopia, Rwanda, and Sierra Leone.

Rwanda, Nepal, and Bangladesh experienced the greatest decrease in poverty rates.  It is possible that “deprivation could disappear within the lifetime of present generations.”  Close behind in the ranks of poverty reduction were Ghana, Tanzania, Cambodia, and Bolivia.

The study is supported by the United Nations’ recent development report.  The UN report stated that poverty reduction was “exceeding all expectations.”

Check out the MPI interactive world map for more details.

– Whitney M. Wyszynski

Source: The Guardian