There are several ways of looking at poverty.  Consumption (or income) poverty is a measure of absolute poverty based on "poverty lines" like $1.25 and $2.00 a day for people in the developing world.  Relative poverty classifies those people whose income is less than, say, half the median of all income earners, as living in poverty, and is used as a measure of poverty in the developed world.

The Multidimensional Poverty Index estimated by the Oxford Poverty and Human Development Initiative (OPHI) is based on the multiple "deprivations" that a poor person faces with respect to education, health and living standards.

What does the MPI have to tell us about poverty in the developing world?

The Multidimensional Poverty Index (MPI) is based on 3 dimensions and 10 indicators which fall under the dimensions.  They are: (i) education, with two indicators of possible deprivations, viz, years of schooling, and school attendance; (ii) health, with two indicators, viz, child mortality, and nutrition; and (iii) living standards, with six indicators, viz, electricity, drinking water, sanitation, flooring, cooking fuel, and assets.  It does not however measure deprivations like political empowerment or gender inequality.

The MPI measure of poverty is inspired by the work of Nobel-prize winning economist Amartya Sen, who argues that development is all about freeing people of the deprivations that stop them from living the life they would like to lead.

Who is classified as being poor?  A person is identified as multidimensionally poor if he or she is deprived in one-third or more of the dimensions.  The MPI provides a very useful indicator of the vivid nature and intensity of poverty, and is a good complement to measures of consumption poverty which provide no qualitative information.

It is estimated that 1.65 billion people in the developing world live in multidimensional poverty, or 31 per cent of the total population.  This figure is in the middle between the World Bank's estimates of consumption poverty based on the $1.25 and $2.00 poverty lines.

Where is the poverty concentrated?  Half of sub-Sahara's population is "MPI poor", and 310 million of these 473 million poor people are "severely MPI poor" (deprived of half more than the MPI dimensions).  About half of south Asia's population is also MPI poor, and 435 million of these 827 million poor people are severely MPI poor.  In East Asia, only 17 per cent of the population is MPI poor, with 98 million of these 269 million poor people being severely MPI poor.

Most MPI poor people live in high-population, middle-income countries, like India, China, Indonesia, the Philippines and Nigeria.  Over twice as many poor people live in middle income countries (1189 million) as in low-income countries (459 million).

A good indicator of the severity of MPI by region is given by the average MPI value -- Sub-Saharan Africa 0.360; South Asia 0.280, Arab States 0.077, East Asia and the Pacific 0.065, Latin America and the Caribbean 0.032, and Central and Eastern Europe and the CIS 0.011.

The MPI analysis highlights the severity of poverty in South Asia where the poorest 26 sub-national regions have a higher combined MPI, and more MPI people, than Sub-Saharan Africa.  In other words, there is a second Sub-Saharan Africa located within South Asia because they both share comparable and tragic rates of multidimensional poverty.

To appreciate how useful the MPI analysis really is, it is necessary to do some forensic work on specific countries, for example:

--  India. 53.7% are estimated to be MPI poor (41.6% of Indians live on less than $1.25 a day, and 75.6% live on less than $2.00 a day). But what are the most important deprivations for India?  They are: nutrition, child mortality, school attendance, and cooking fuel.  What are the sub-regions most affected by multidimensional poverty?  Bihar, Jharkhand and Madhya Pradesh.

-- Indonesia.  20.8% are estimated to be MPI poor (24.6% of Indonesians live on less than $1.25 a day, and 56.6% live on less than $2.00 a day).  Most important contributions to MPI are: child mortality, cooking fuel, school attendance, and sanitation.  The regions most affected by multidimensional poverty are: Papua, East Nusa Tenggara, and Maluku.

-- Philippines.  13.4% are estimated to be MPI poor (22.6% of Filipinos live on less than $1.25 a day, and 45.0% live on less than $2.00 a day).  Most important contributions to MPI are: child mortality, years of schooling, cooking fuel, and sanitation.  The regions most affected by multidimensional poverty are:  Armm, Mimaropa, and East Visayas.

-- Myanmar.  31.8% are estimated to be MPI poor (there are no data on consumption/income poverty).  Most important contributions to MPI are: nutrition, years of schooling, school attendance, and drinking water.  Rural poverty is three times that of urban poverty.

-- China.  12.5% are estimated to be MPI poor (28.4% of Chinese are estimated to live on $1.25 a day, and 51.2% on $2.00 a day). Most important contributions to MPI: years of schooling, nutrition, cooking fuel, and sanitation.  Although urban poverty exists in China, rural poverty is estimated to be more than 5 times higher than that of urban areas.

The comparison of India with Indonesia, the Philippines and China is intriguing.  India's MPI is higher than its income poverty, the reverse of the other countries.  This suggests that there is much to gain in India in improving the delivery of basic public services.  This argument also applies to Bangladesh, Cambodia, Laos, Nepal and Pakistan where the MPI is also higher than income poverty.

In conclusion, the Oxford Poverty & Human Development Initiative's work on multidimensional poverty provides excellent insights into the nature of poverty.  The above country notes highlight that national governments and international donors need to prioritize different development issues according to the country.  The character of poverty can be very different between countries.

Reference:

Multidimensional Poverty Index 2011.  Oxford Poverty & Human Development Initiative

www.ophi.org.uk