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The MPI

The Multidimensional Poverty Index: Achievements , Conceptual , and Empirical Issues Caroline Dotter Stephan Klasen Universität Göttingen Milorad Kovacevic HDRO HDRO Workshop March 4, 2013. 1. The MPI. Measuring acute multidimensional poverty ; Based on dual cut -off approach (1/3);

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The MPI

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  1. The Multidimensional Poverty Index: Achievements, Conceptual, andEmpiricalIssuesCaroline DotterStephan KlasenUniversität GöttingenMilorad KovacevicHDROHDRO WorkshopMarch 4, 2013 1

  2. The MPI • Measuringacute multidimensional poverty; • Based on dual cut-off approach (1/3); • Dimensions: Health (mortalityandnutrition), Education (yearsandenrolement), Standard ofliving (house, water, sanitation, electricity, cookfuel, assets); • MPI = Headcount * Intensity; • Data used: DHS, MICS, WHS • Calculatedforsome 110 countries (increasinglyavailableformorethan 1 period);

  3. In praiseof an MPI-type Indicator • Direct multidimensional complement/competitorto $ a dayindicator; • Similarbreadthandcoverage • Couldpossiblycalculateandmonitor global poverty; • Also based on capabilityapproach (asisthe HDI); • Actionableandpolicy-relevant atthe national (and sub-national level); advantagelargelyunexploitedby UNDP; • Consistentwithreasonablesetofpovertymeasurementaxioms (in contrastto HPI); • Based on highqualityandcomparabledata, with potential tomeasurepovertyover time;

  4. ConceptualIssues • Dual cut-off navigatesbetweenunionandintersectionapproach • But leadsto formal andinterpretationalproblems: deprivationsentirelyignoredbelowthecut-off seemsproblematic; • Union approachconceptuallytobepreferred? • Neglectofinequality in thespreadofdimensionsacrossthepopulation, whichis also problematic; • ProposalbyRippin: In thepovertyidentificationstep, usesquareofweighteddeprivationshareaspoveretyindicator (andaddthoseup in aggregationstep); • Other proposals in theliterature; • Useofintensity in the MPI: • cannotcomparewith $ a dayheadcount • littlevariation in intensity (heavilydrivenbysecondcut-off); • useheadcountasheadlineindicatorwithintensity-inequality sensitive measureascomplementaryindicator?

  5. EmpiricalIssues • WHS limitingandproblematic (andnowsuperfluous?); suggestionto just use MICS and DHS; • Standard ofliving: • Unclearinterpretationofelectricityaccess (unequaluse!), cookingfuel (depends on cookingsituation), andsanitation (needsdifferacross rural/urban, regions); • Quite large influence on overall MPI; • 3 indicatorswouldsuffice (andcaptureothersas well): floor, assets, anddrinkingwater; • Enrolments: • Onechild not enrolled, householddeprived; • Problem oflateenrolments; • Adjust time windowtoallowforlateenrolments (e.g. allowfor 2 yearslateenrolment);

  6. EmpiricalIssues • Mortality: • Onlyconsiderrecentchilddeaths (MICS: onlyconsiderdeathsofwomenwhogavebirths in last 10 years?); • Nutrition: • BMI ofadultsandchildhoodundernutritioncut-offs not directlycomparable; • BMI andunderweightsubjecttobias due tonutritiontransition; • Focus on childrenbeyond 6 months? • Proposal: Just focus on childhoodundernutritionandstunting; • Education: • Cut-off (onepersonwith 5 yearsenoughfor non-deprivation) andimpliesperfecteconomiesofscale (asymmetry); • Proposal: deprivediflessthan 50% ofadultshave 5 years+

  7. EmpiricalIssues • Asymmetriccut-offs in health, enrolment, nutrition, education: • Hassystematicinfluence on impactofhouseholdsize on MPI; • Not clearthatasymmetriesarejustified; • Definecut-offswithrespecttohhsize (e.g. 20% ofchildrenareundernourished); • Ineligiblepopulation: • Nochildren (in school-goingageorwith nutritional measurement); • Presumed non-deprived in MPI (seriousproblemandbias!); • Makesseverepovertynear-impossibleforhhwithouteligiblepopulation; • A seriousproblemof differential importanceacross countries;

  8. All solutionsproblematic: • Non-deprivationassumption; • Droppingobservations; • Usingotherindicatorfrom same dimension; • Proposal: Hybrid approach: Useindicatorfrom same dimensionifoneindicatorismissing, andadjustoverall MPI cut-off ifbotharemissing (canbeeasilyimplemented); • Advantage: Keeps all observations in, usesinformationtomaximumextent; likelytogenerate least bias; • Disadvantage: Decompositoionnolongerpossible;

  9. ImplementingtheProposals • A reducedand (more robust) MPI? • 3 standardoflivingindicators; • Nutrition: stunting (>6mts) • Mortality: onlyrecentdeaths; • Enrolment: allowforlateenrolment; • Cut-offsmore uniform (>20% affected in nutrition, enrolment, mortality, <50% with 5 years+ education); • Hybrid approachforineligiblepopulation; • Implementapproachusing DHS for Armenia, Ethiopia, andIndia; • Changesincidence (mainly due toeducationcut-off), but also correlatesofpoverty (e.g. hhsize);

  10. Conclusion • MPI hasbeen a goodstarttodevelopinternationallycomparable multidimensional povertyindicator; • But thereare open issuesandproblems, andrefinementsatconceptualandempiricallevelwarranted • Conceptuallevel: Union approach, incorporatinginequality, headcounttheheadlineindicator? • Empiricallevel: Changestoindicators, cut-offs, datasetsused, andassumptionsaboutineligiblepopulation; • Most issuescanbereadilyaddressedandareworthaddressing.

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