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winsight 13 A one minute guide to the Multidimensional Poverty Index

Multidimensional Poverty Index: Basic Overview

A one minute guide to the Multidimensional Poverty Index

(Compiled and adapted from http://www.ophi.org.uk/policy/multidimensional-poverty-index/)[1]

Introduction

The MPI is an index of acute multidimensional poverty. It reflects deprivations in very rudimentary services and core human functioning for people across 104 countries. Although deeply constrained by data limitations, MPI reveals a different pattern of poverty than income poverty, as it illuminates a different set of deprivations. The MPI has three dimensions: health, education, and standard of living. These are measured using ten indicators. Poor households are identified and an aggregate measure constructed using the methodology proposed by Alkire and Foster. Each dimension and each indicator within a dimension is equally weighted.

The indicators

1        Education (each indicator is weighted equally at 1/6 )

1.1   Years of Schooling: deprived if no household member has completed five years of schooling

1.2   Child Enrolment: deprived if any school-aged child is not attending school in years 1 to 8

2        Health (each indicator is weighted equally at 1/6)

2.1   Child Mortality: deprived if any child has died in the family

2.2   Nutrition: deprived if any adult or child for whom there is nutritional information is malnourished

3        Standard of Living (each indicator is weighted equally at 1/18)

3.1   Electricity: deprived if the household has no electricity

3.2   Drinking water: deprived if the household does not have access to clean drinking water or clean water is more than 30 minutes walk from home (MDG Definition)

3.3   Sanitation: deprived if they do not have an improved toilet or if their toilet is shared (MDG Definition)

3.4   Flooring: deprived if the household has dirt, sand or dung floor

3.5   Cooking Fuel: deprived if they cook with wood, charcoal or dung

3.6   Assets: deprived if the household does not own more than one of: radio, TV, telephone, bike, or motorbike

Who is multi-dimensionally poor

A household is identified as multi-dimensionally poor if, and only if, it is deprived in some combination of indicators whose weighted sum exceeds 30% of deprivations.  To know if a household is multi-dimensionally poor, for each of the above indicators, add 1/6 for health and education or 1/18 for standard of living for a household. If the total is 3/10 (0.3) or more, then that household is classified as multi-dimensionally poor.

Half of the world’s poor as measured by the MPI live in South Asia (51%, 844 million) and one quarter in Africa (28%, 458 million). Niger has the greatest intensity and incidence of poverty in any country, with 93 per cent of the population classified as poor in MPI terms.

The advantage

The MPI reflects both the incidence of poverty – the proportion of the population that is multi-dimensionally poor (H, households) – and the average intensity (A) of their deprivation – the average proportion of indicators in which they are deprived. The MPI is calculated by multiplying the incidence of poverty by the average intensity across the poor (HxA).

The MPI reveals the combination of deprivations suffered by a household at the same time in addition to the intensity. It reveals where exactly the deprivations cluster, making focussed intervention possible. For instance, in a community, they may be quite literate, yet their standard of living might be poor (or vice versa). It enables policy and programmes to be focused. The MPI also reveals great variations within countries.

MPI and India

Despite strong economic growth, MPI analysis reveals the persistence of acute poverty in India. There are more MPI poor in eight Indian states (421 million in Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and West Bengal) than in the 26 poorest African countries combined (410 million).

The following table shows the multidimensional poverty rate (MPI) and its two components for India. It reveals that 81% are multi-dimensionally poor in Bihar. Poverty in Bihar and Jharkand is most intense—poor people are deprived in 60% of the MPI’s weighted indicators. The largest number of poor people (134.7 million, 21%) of India’s poor live in Uttar Pradesh. West Bengal has the third largest number of poor.  Multidimensional poverty is lowest for Kerala. The top five states have only 4.5% of the poor. The five poorest states have more than 50% of the poor.

Multidimensional Poverty across Indian States[2]

MPI Rank

States

Population (million) 2007

MPI

Proportion of poor

Average intensity

Contribution to overall poverty

Number of MPI poor (million)

1

Kerala

35

0.065

15.9%

40.9%

0.6%

5.6

2

Goa

1.6

0.094

21.7%

43.4%

0.0%

0.4

3

Punjab

27.1

0.120

26.2%

46.0%

1.0%

7.1

4

Himachal Pradesh

6.7

0.131

31.0%

42.3%

0.3%

2.1

5

Tamil Nadu

68

0.141

32.4%

43.6%

2.6%

22.0

6

Uttaranchal

9.6

0.189

40.3%

46.9%

0.5%

3.9

7

Maharashtra

108.7

0.193

40.1%

48.1%

6.0%

43.6

8

Haryana

24.1

0.199

41.6%

47.9%

1.3%

10.0

9

Gujarat

57.3

0.205

41.5%

49.2%

3.4%

23.8

10

Jammu and Kashmir

12.2

0.209

43.8%

47.7%

0.7%

5.4

11

Andhra Pradesh

83.9

0.211

44.7%

47.1%

5.1%

37.5

12

Karnataka

58.6

0.223

46.1%

48.3%

4.2%

27.0

13

Eastern Indian States

44.2

0.303

57.6%

52.5%

4.0%

25.5

14

West Bengal

89.5

0.317

58.3%

54.3%

8.5%

52.2

15

Orissa

40.7

0.345

64.0%

54.0%

4.3%

26.0

16

Rajasthan

65.4

0.351

64.2%

54.7%

7.0%

41.9

17

Uttar Pradesh

192.6

0.386

69.9%

55.2%

21.3%

134.7

18

Chhattisgarh

23.9

0.387

71.9%

53.9%

2.9%

17.2

19

Madhya Pradesh

70

0.389

69.5%

56.0%

8.5%

48.6

20

Jharkhand

30.5

0.463

77.0%

60.2%

4.2%

23.5

21

Bihar

95

0.499

81.4%

61.3%

13.5%

77.3

 

India

1,164.70

0.296

55.4%

53.5%

-

645.0

 

Within this, there are variations. Multidimensional poverty is highest (81.4%) among Scheduled Tribes, followed by Scheduled Castes (65.8%), Other Backward Classes (58.3%) and others (33.3%). 

Breakdown of Multidimensional Poverty across Hindu Castes and Tribes

States

MPI

Percentage of MPI Poor

Average Intensity

Scheduled Caste

0.361

65.80%

54.80%

Scheduled Tribe

0.482

81.40%

59.20%

Other Backward Class

0.305

58.30%

52.30%

General

0.157

33.30%

47.20%

The MPI figures (55%) are in contrast to the the World Bank(42%),[3] N C Saxena(50%) Arjun Sengupta(41%),[4] Tendulkar(37%)[5] and the Planning Commission (27.5%) estimates.

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[1] For more: General: http://www.ophi.org.uk/policy/multidimensional-poverty-index/ ; Data: MPI Data is available at Alkire, Sabina and Maria Emma Santos. 2010. Multidimensional Poverty Index: 2010 Data. Oxford Poverty and Human Development Initiative. Available at: www.ophi.org.uk/policy/multidimensional-poverty-index/ India: http://www.ophi.org.uk/wp-content/uploads/Country-Brief-India.pdf

[2]   The calculation includes Delhi but this table shows only Indian states. The estimation of state-wise poor is based on the actual population in 2007. The proportion of MPI poor is estimated using the DHS dataset 2005-6, so the total number of poor people in the last column may not sum up exactly. ‘Eastern Indian states’ include Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.

[3]   The bank’s poverty line is $1.25. At India’s PPP it translates to Rs21.6 a day in urban areas and Rs14.3 a day in rural areas.

[4] 41% below Rs 14.6 per day. Extremely Poor (6.4%, Rs 8.9), Poor (15.4%, Rs 11.6) Marginally Poor (19.0%, Rs 14.6). Vulnerable (36%, Rs 20) Total 77%, 836 million people, below Rs 20 per day. Report On Conditions Of Work And Promotion Of Livelihoods In The Unorganised Sector: National Commission For Enterprises In The Unorganised Sector, National Commission For Enterprises In The Unorganised Sector, Government Of India. http://nceus.gov.in/Condition_of_workers_sep_2007.pdf

[5]   Overall 37.2%, with 41.8% rural (below Rs 13.8 per day, Rs 446.68 per month) and 25.7% urban (Rs 578.80 per month). Expert Group on Methodology for Estimation of Poverty, Chair Prof. Suresh D. Tendulkar; http://www.planningcommission.gov.in/eg_poverty.htm