On the Watts Multidimensional Poverty Index and its Decomposition

SummaryThe multidimensional extension of the Watts poverty index may be expressed as a function of five determinants measuring, respectively, the impacts of what are defined in the paper as the Watts poverty gap ratio, the Theil–Bourguignon index of inequality among the poor, the overall headcount ratio, the weights of the various dimensions, and some measure of correlation between the various dimensions. Using the Shapley decomposition, we apply this index to world data on the per capita GDP, life expectancy, and literacy rates and derive the contributions of the five determinants defined above to the variation of this index during 1993–2002.