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14 July 2010updated 27 Sep 2015 2:17am

MPI: a progressive approach to poverty

The Oxford Poverty and Human Development Initiative has created an innovative system of poverty meas

By Tom Phillips

At an extremely optimistic Human Development Report Office policy forum today the Oxford Poverty and Human Development Initiative revealed its new Multidimensional Poverty Index. The index measures multiple types of deprivations (ten in all), so providing a detailed picture of not just who is poor, but in what way they are poor.

The beauty of the system is its simplicity, flexibility and open-endedness. The duo behind MPI — James Foster, professor of economics and international affairs at George Washington University, and Dr Sabina Alkire, director of the Oxford Poverty and Human Development Initiative — championed the new index as “highly accessible”.

MPI features three deprivation dimensions — health, education and standard of living. Using the Alkire Foster method, outcomes of individuals or households are measured against multiple criteria from each of the three dimensions.

Child mortality and nutrition are the indicators for health, with years of schooling and child enrolment (if any school-aged child is out of school in years one to eight) the indicators for education. The standard of living dimension features six individual indicators — electricity, drinking water, sanitation, flooring, cooking fuel and assets.

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The hope is that any assessments made using such a range of indicators will assist policymakers in shaping their strategies and, crucially, targeting resources.

Using the new system, OPHI has already evaluated 104 countries’ poverty. However, Alkire and Foster openly admit that they are “deeply constrained by data”. If and when ample data emerges, new indicators could be added to the multidimensional model — for example, work, safety and psychological/subjective well-being (eg, domestic violence or child abuse).

OPHI made clear that MPI will supplant the Human Poverty Index (HPI) used in Human Development Reports of the past and will serve to complement, not replace, existing income poverty measures.

If one compares income poverty results with MPI results, there appears a lack of correlation between the two — some countries being extremely MPI poor but far less income-poor. In such countries parents may well earn a decent enough wage, but the education and health-care systems may be inadequate.

For example, in Ethiopia 90 per cent of people are MPI-poor, compared to 39 per cent “extreme income-poor”, and in Pakistan 51 per cent are deprived on the MPI scale while 23 per cent are extremely poor in terms of income.

In contrast, Tanzanians are 81 per cent income-poor and 65 per cent MPI-poor. The diversity of these results appears to validate the new system. What it means to be poor has been dissected and magnified — the result a vast improvement on older index methods, which were very narrow by comparison.

Perhaps the most challenging task ahead of Alkire and Foster now will be convincing governments around the world that MPI is workable and that it should be adopted (there are parts of the world that tend to shy away from any measures that lead to increased scrutiny, higher levels of data collation and greater public understanding).

The MPI will be featured in the upcoming 20th-anniversary edition of the UNDP Human Development Report.