Global Multidimensional Poverty Index (MPI)

Economic Affairs Poverty Related Issues

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Poverty has traditionally been measured in one dimension, usually income or consumption. This means that whether a person is poor or not decides on the basis of basket of goods and services. But poverty is a broad concept which includes lack of education, health, housing, empowerment, employment, personal security and more. No one indicator, such as income, is uniquely able to capture the multiple aspects that contribute to poverty. For this reason, since 1997, Human Development Reports (HDRs) have measured poverty in ways different than traditional income-based measures. The Human Poverty Index (HPI) was the first such measure, which was replaced by the Multidimensional Poverty Index (MPI) in 2010. MPI is launched by Oxford Poverty and Human Development Initiative (OPHI).

The MPI is an index designed to measure acute poverty. Acute poverty refers to two main characteristics. First, it includes people living under conditions where they do not reach the minimum internationally agreed standards in indicators of basic functioning , such as being well nourished, being educated or drinking clean water. Second, it refers to people living under conditions where they do not reach the minimum standards in several aspects at the same time. The MPI combines two key pieces of information to measure acute poverty: the incidence of poverty, or the proportion of people (within a given population) who experience multiple deprivations, and the intensity of their deprivation - the average proportion of (weighted) deprivations they experience.

If someone is deprived in a third or more of ten (weighted) indicators, the global index identifies them as ‘MPI poor’, and the extent – or intensity – of their poverty is measured by the number of deprivations they are experiencing. The MPI can be used to create a comprehensive picture of people living in poverty, and permits comparisons both across countries, regions and the world and within countries by ethnic group, urban/rural location, as well as other key household and community characteristics. This makes it invaluable as an analytical tool to identify the most vulnerable people - the poorest among the poor, revealing poverty patterns within countries and over time, enabling policy makers to target resources and design policies more effectively.

Limitation of MPI:
First, In some cases careful judgments were needed to address missing data. But to be considered multidimensionally poor, households must be deprived in at least six standard of living indicators or in three standard of living indicators and one health or education indicator. This requirement makes the MPI less sensitive to minor inaccuracies. Second, intra-household inequalities may be severe, but these could not be reflected.Third, the estimates presented are based on publicly available data and cover various years between 2005 and 2014, which limits direct cross-country comparability. Finally, , MPI’s six “living standard” indicators are likely to be correlated with consumption or income, but they are unlikely to be very responsive to economic fluctuations. The MPI would probably not capture well the impacts on poor people of economic downturns (such as the Global Financial Crisis) or rapid upswings in macro-economic performance.

Global MPI 2015:
Globally, based on a rural-urban analysis, of the 1.6 billion people identified as MPI poor, 85% live in rural areas. This is significantly higher than estimates of 70-75% in poverty, where income is used as the basis for determining poverty. According to the MPI, out of its 1.2 billion-plus population, India is home to over 340 million destitute people and is the second poorest country in South Asia after war-torn Afghanistan. Some 640 million poor people live in India (40% of the world’s poor), mostly in rural areas, meaning an individual is deprived in one-third or more of the ten indicators (malnutrition, child deaths, defecating in the open).

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