Multidimensional Poverty Index

Measurement and Analysis

What is Global multidimensional poverty index?
The Global Multidimensional Poverty Index (MPI) is a new measure designed to
capture the severe deprivations that people face at the same time. The Global MPI
reflects both the incidence of multidimensional deprivation, and its intensity – how
many deprivations people experience at the same time. It 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.
What is multidimensional poverty?
• Poverty is often defined by one-dimensional measures, such as income.
Multidimensional poverty includes several factors such as "poor health, lack of
education, inadequate living standard, lack of income, disempowerment, poor quality
of work and threat from violence.

• The Multidimensional Poverty Index (MPI) is a composite measure of the percentage

of deprivations that the average person would experience if the deprivations of poor
households were shared equally across the population
Objectives
•  To understand poverty levels
•  To generate policy, targeting development initiatives
• To monitor and evaluate economic progress over time.
•  To focus on promoting economic growth
 Measurement Method of Multi-dimensional Poverty Index (MPI)
The Alkire-Foster (AF) method is a way of measuring multidimensional poverty developed by
OPHI (Oxford Poverty& Human development Initiative).

1
• Defining the data source

2
• Choosing the unit of analysis

3
• Choosing the dimensions and indicators

4
• Choosing the indicators deprivation cut-offs

5
• Choosing the indicators weights

6
• Choosing the poverty cut-off (to identify the poor)

7
• Computing the MPI
STEP 1: Defining the data source
The first fundamental requirement for any MPI (global, regional,
national or sub-national) is that all the information for the individual or
household must come from the same survey. This is to determine
whether a person is deprived in a number of things altogether.
Thus, one cannot collect indicators from different data sources.

STEP 2: Choosing the unit of analysis

There unit of analysis is household because internationally comparable
surveys do not have individual-level information for the fourteen
indicators in the MPI.
STEP 3: Choosing the dimensions and indicators
The MPI uses fourteen indicators belonging to four dimensions.
Dimensions are
 Childhood and youth
 Health
 Work
 Standard of living
 
Indicators:
 Childhood and Youth
1) School Attendance : HH with at least one child (between 5 and 16years) not
attending school
2) Access to child care services: HH with at least one child (0-5)without access to
child care (health, nutrition, care)
3) Child Labor: HH with at least one child(12 -17) working.
 Health
1) Child mortality : Any child has died in the family
2) Nutrition : Any adult or child for whom there is nutritional information is
malnourished
3) Healthcare Access When Needed: HH with at least one member who in the last
30 days required health care due to sickness , accident etc . But didn’t seek a
physician , specialist, or any health institution.
 Standard of living
1) No electricity
2) No access to clean drinking water
3) No access to adequate sanitation
4) House has dirt floor
5) Household uses dirty cooking fuel
6) Household has no car and owns at most one bi cycle, motorcycle,
refrigerator, TV, mobile
 Work
1) Long-Term Unemployment: HH with at least one member unemployed
for more than1year. Unemployed for more than1year.
2) Formal Employment: At least one member of the HH is employed with
no pension scheme
STEP 4: Choosing the indicators deprivation cut-offs

The MPI and any multidimensional poverty measure of its type requires
a deprivation cut-off for each indicator. Usually, the indicators’
deprivation cut-offs are noted as , so that person Zi is considered
deprived if her achievement in that indicator Xi is below the cut-off,
that is, if ii Xi < Zi .
STEP 5 :Choosing the indicators weights

In the MPI the four dimensions are equally weighted, so that each of
them receives a 1/4 weight. The indicators within each dimension are
also equally weighted.
Thus, each indicator within the childhood and youth receive 1/12
weight by ((1/4)/3) because there have three indicators in children and
youth dimension.
Other indicators weight are also same as before.
 Poverty

Standard of Employment 0.25

Childhood & 0.25 Health 33.3%
0.25 0.25
Youth Living

School Attendance 0.0833 Child mortality 0.0833 Electricity .04166 Long term 0.125
unemployment
Access to child 0.0833 Nutrition 0.0833 Sanitation .04166
care services
Health care Drinking Formal
0.0833 .04166 Employment 0.125
Child labor 0.0833 access water

Floor Type .04166

Fuel .04166

Asset .04166
STEP 6:Choosing the poverty cut-off (to identify the poor)

That the deprivation score for each person lies between 0 and 1. The
score increases as the number of deprivations of the person increases
and reaches its maximum of 1 when the person is deprived in all
component indicators. A person, who is not deprived in any indicator,
receives a score equal to 0.
C=W1I1+W2I2+W3I3+…………+WiIi
Indicators People in household Weight
1 2 3 4 5
Household size 5 3 6 7 4  
Childhood and youth    
At least one child(5-16) not attending in 0 0 1 1 0 1/12=0.0833
school

least one child (0-5)without access to 1 1 0 0 0 1/12=0.0833

child care
At least one child(12 -17) working 1 1 0 0 0 1/12=0.0833

Health    
Any child has died in the family 1 0 0 1 0 1/12=0.0833

Any adult or child for whom there is 1 1 0 1 0 1/12=0.0833

nutritional information is malnourished

at least one member who in the last 30 1 0 0 0 0 1/12=0.0833

days required health care but didn’t seek
a physician

Standard of living    
No electricity 0 1 1 1 0 1/24=0.04166
No access to clean drinking water 0 0 0 0 0 1/24=0.04166
No access to adequate sanitation 1 0 1 0 0 1/24=0.04166
House has dirt floor 0 0 0 0 0 1/24=0.04166
Household uses dirty cooking fuel 1 1 1 1 1 1/24=0.04166
Household has no car and owns at most 0 1 0 1 1 1/24=0.04166
one bi cycle, motorcycle, refrigerator, TV,
mobile
Employment    

At least one 1 0 0 1 0 1/8=0.125

member
unemployed for
more than1year.
Unemployed for
more than1year

At least one 0 1 0 0 1 1/8=0.125

member of the HH
is employed with
no pension
scheme

Score Ci(sum of 0.625  0.5 0.249  0.5 0.1667   

each deprivation
multiplied by its
weight )

Is the household Yes   yes  no yes   no  

poor ( c>1/4=0.25)

Censored score  0.625   0.417  0.249  0.5  0.208  

Ci(k)
 STEP 7: Computing the MPI
We know,
MPI=H*A
The headcount ratio, H is the proportion of the population who are multi-dimensionally poor:
H = q/n
Where q is the number of people who are multi-dimensionally poor and n is the total population.

The intensity of poverty, A, reflects the proportion of the weighted component indicators in which, on
average, poor people are deprived. Where c is the deprivation score that the poor experience.
A = Σ qc/q
Score of each person in household 1:
c= (1*1/12)+ (1*1/12)+(1*1/12)+ (1*1/12)+ (1*1/12)+ (1*1/24)+ (1*1/24) +(1*1/8)
= 0.625
Multidimensional Headcount ratio (H) = (5+3+7) / (5+3+6+7+4) = 0.6
Intensity of poverty (A) = (0.625*5)+(0.417*3)+(0*6)+(.5*7)+(0*4) / (5+3+7) = .525
MPI = 0.6 * 0.525 = 0.315
CONCLUSION

• Bangladesh  has the highest incidence of poverty in south Asia and the third highest number of poor
in the world after India and china. preliminary report on household income and Expenditure survey
(HIES) 2005 of the Bangladesh  Bureau of statistics (BBS) shows downward trend in income
poverty. 
• But Between 2010 and 2016, about 8 million Bangladeshi were lifted out of poverty and 5.6 million
out of extreme poverty. Depth (poverty gap) and severity (squared of poverty gap) of poverty also
presented improvements of about 23 and 22 percent, respectively
• Low income population in urban area have to face multidimensional deprivation such as, they must
need to pay for housing, basic infrastructures and services (water supply, sanitation, electricity),
transport, housing, health, education, fuel (Satterweit,1989).
So, this study findings will contribute to the present and future government creativities because
‣ MPI reflects both the incidence of poverty and the average intensity of their deprivation.
‣ It reveals the combination of deprivations suffered.
‣ Makes focused intervention possible( policy and programs)