Counting and multidimensional poverty measurement

This paper proposes a new methodology for multidimensional poverty measurement consisting of an identification method ρk that extends the traditional intersection and union approaches, and a class of poverty measures Mα. Our identification step employs two forms of cutoff: one within each dimension to determine whether a person is deprived in that dimension, and a second across dimensions that identifies the poor by ‘counting’ the dimensions in which a person is deprived. The aggregation step employs the FGT measures, appropriately adjusted to account for multidimensionality. The axioms are presented as joint restrictions on identification and the measures, and the methodology satisfies a range of desirable properties including decomposability. The identification method is particularly well suited for use with ordinal data, as is the first of our measures, the adjusted headcount ratio M0. We present some dominance results and an interpretation of the adjusted headcount ratio as a measure of unfreedom. Examples from the US and Indonesia illustrate our methodology.

Research Highlights
► This paper proposes a new methodology for multidimensional poverty measurement, Mka = (ρk,Ma).
► Our identification step ρk uses dual cutoffs to identify a) dimensional deprivations and b) poverty.
► Our aggregate measure adjusts FGT measures to account for multidimensionality.
► Our first measure Mk0 = (ρk,M0) can be used with ordinal or categorical data.
► Our methodology Mka = (ρk,Ma) satisfies many desirable properties including decomposability.