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Acute Multidimensional Poverty: A New Index for Developing CountriesAlkire & Santosidentified as poor and who live in a household where at least a child died. Our estimate can be eitherhigher or lower than the mortality rate because a) it counts as deprived all people in households witha child death and not the actual children that died (both the numerator and the denominator aredifferent); b) it depends on the distribution of child mortality in the population and the size of thehouseholds with child mortality; 21 c) we consider as non-deprived households where no one wasinterviewed on mortality. 22 Once again, note that although considering the household as the unit ofanalysis is not ideal, it does have some intuitive meaning, because the household experiences anexternal negative effect by the death of a child.The MPI considers and weights standard of living indicators individually. It would also be veryimportant and feasible to combine the data instead into other comparable asset indices and exploredifferent weighting structures. The present measure uses six indicators which, in combination,arguably represent acute poverty. It includes three standard MDG indicators that are related tohealth, as well as to standard of living, and particularly affect women: clean drinking water,improved sanitation, and the use of clean cooking fuel. The justification for these indicators isadequately presented in the MDG literature. It also includes two non-MDG indicators: electricityand flooring material. Both of these provide some rudimentary indication of the quality of housingfor the household. The final indicator covers the ownership of some consumer goods, each ofwhich has a literature surrounding them: radio, television, telephone, bicycle, motorbike, car,truck and refrigerator. We are aware that all the living standard indicators are means rather thanends; they are not direct measures of funtionings. Yet, they have two strengths. In the first place,unlike income, which can serve an incredibly wide range of purposes (and one never knows whetherit is used effectively to accomplish the needs considered to be basic), these are means very closelyconnected to the end (functioning) they are supposed to facilitate. Access to safe drinking waterserves directly to satisfy the need of hydration and hygiene (hygiene is also facilitated by the accessto improved sanitation and flooring material). Clean cooking fuel prevents respiratory diseases,which are a leading cause of preventable death, and contributes to a healthy home environment.Electricity is fundamental to pursue a number of activities. It allows lighting, which in turn allowspeople to be independent during the night time. Power also enables a wide range of work and leisureactivities ranging from refrigeration to drilling to blending, sewing, and so forth. Electricity is alsousually a safer means of lighting. And the set of considered assets are directly linked to the ability tocommunicate with other people, to be mobile, and even to have access to safe food. Secondly, mostof the indicators are related to the MDGs, which provides stronger grounds for their inclusion inour index.Of the ten indicators, all but one are relatively sensitive to policy change and measure ‘flow’, whichmeans they will reflect changes in-country with as little as one year between surveys. The exceptionto this is the stock indicator of child mortality. More direct measures of household healthfunctioning were simply not available. Other relatively stable indicators are years of schooling –which will be stable for many households who have no one in full-time education.21 If mortality is concentrated in a few households and the size of these households is not excessively large, our estimateswill tend to be lower than the standard measure. On the other hand if mortality is distributed one-per household, ourestimates will tend to be higher than the standard measure. For specific examples, please see the section on results.22 As explained by describing the eligible population for the mortality questionnaire in each survey (see footnote 22),many households in each survey were not asked the mortality questionnaire, and they are considered non-deprived inthis indicator. If we had restricted the information only to households were the mortality questionnaire was asked, wewould have missed significant information in the other indicators.www.ophi.org.uk July 2010 16
Acute Multidimensional Poverty: A New Index for Developing CountriesAlkire & SantosAs we said before, it would have been ideal to estimate the measure at the individual level. Measurescreated using individual level data have significant strengths: for example, they can be decomposedto compare poverty between men and women, and between different age groups. However, workingat the household level (a forced choice given the availability of data 23 ) is not all counter-intuitive. Itallows for interaction, smoothing, and mutual sharing within the household regarding the differentindicators considered. We are aware that household size may affect results: large households aremore likely to be deprived in child school attendance, nutrition, and mortality simply because theyhave more people who are ‘eligible’ to report these deprivations. For better or worse, this may beless of a problem in practice than in theory, particularly for health deprivations, as data are rarelyavailable for all household members. However large households are less likely to be deprived inyears of schooling. In subsequent versions of this paper, we will present decompositions andcorrelations of poverty and household size to explore vigorously any potential biases.To capture the poverty differences between social and regional groups in Bolivia, Kenya, and India,we have decomposed the MPI by state and by ethnic group (see Appendix 3 on Decomposition). Wefind that large differences do emerge, so groups are clearly a key variable to consider in analyzing thecauses of and responses to multidimensional poverty. The MPI allows these group differences to beseen and studied in detail, in order to design effective policies. 242.4 Cutoffs for each IndicatorWe have chosen cutoffs for each indicator that are based to a large extent on international standardssuch as the Millennium Development Goals. Where no standard was possible, we consulted theliterature and also implemented multiple cutoffs to explore the sensitivity of the overall ranking tothem.The indicators and cutoffs are summarized in the figure below.Figure 3: Dimensions, indicators, cutoffs and weights of the MPIDimension Indicator Deprived if… Related to… RelativeWeightEducationYears of Schooling No household member has completed five years of schooling MDG2 16.7%Child School Any school-aged child is not attending school in years 1 to 8 MDG2 16.7%AttendanceMortality Any child has died in the family MDG4 16.7%Health Nutrition Any adult or child for whom there is nutritional informationis malnourished*MDG1 16.7%Electricity The household has no electricity 5.6%Sanitation The household´s sanitation facility is not improvedMDG7 5.6%(according to the MDG guidelines), or it is improved butshared with other householdsStandardof LivingWaterThe household does not have access to clean drinking water(according to the MDG guidelines) or clean water is morethan 30 minutes walking from home.MDG7MDG7Floor The household has dirt, sand or dung floor 5.6%Cooking Fuel The household cooks with dung, wood or charcoal. MDG7 5.6%AssetsThe household does not own more than one of: radio, TV,telephone, bike, motorbike or refrigerator, and does not owna car or truck.MDG7 5.6%Note: MDG1 is Eradicate Extreme Poverty and Hunger, MDG2 is Achieve Universal Primary Education, MDG4 is Reduce Child Mortality, MDG7 is Ensure EnvironmentalSustainability.* Adults are considered malnourished if their BMI is below 18.5. Children are considered malnourished if their z-score of weight-for-age is below minus twostandard deviations from the median of the reference population.23 Note that to compute the poverty measure at the individual level, we would have needed nutritional information ofevery household member (and not just children/women/respondent – depending on the survey used). Analogously, wewould have needed information on whether each adult experienced the death of a child.24 For example, Mexico’s national poverty measure highlighted the high poverty rates of indigenous people.5.6%www.ophi.org.uk July 2010 17
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