setting the post-2015 development agenda: is multidimensional poverty measurable?

Jonathan HaughtonSuffolk University, Boston MA 02108, USA

[email protected] http://web.cas.suffolk.edu/faculty/jhaughton/

Knowledge Globalization Conference, Shijiazhuang, May 30-31, 2014

Setting the Post-2015 Development Agenda:

Is Multidimensional Poverty Measurable?

mailto:[email protected]

http://web.cas.suffolk.edu/faculty/jhaughton/

http://web.cas.suffolk.edu/faculty/jhaughton/

Post-MDGs and poverty Knowledge Globalization Conference, Shijiazhuang, May 31, 2014

MDGs are ending; what will follow?How measure poverty and hunger?

Conventional monetary metric? Issues in making international comparisons

Multidimensional poverty MPI 2.0 headline?

Other methodsDoes it matter?

CorrelationsThe data problemRecommendations

Outline

Millennium Development Goals

Emerged: 23 conferences. Agreed Sept. 2000 by 147 countries8 goals, 21 targets, 60 indicators, over 1990-2015Concentrate world attention on developmentChina: reports; fast poverty reduction



1: Eradicate Extreme Poverty and Hunger

Target 1.A: Halve, between 1990 and 2015, the proportion of people whose income is less than USD1.25 a day Met by 2010: 700m fewer extremely poor; 43% to 21% But still 1.2bn poor, including c. 90 m in China

Target 1.C: Halve, between 1990 and 2015, the proportion of people who suffer from hunger Reachable by 2015: 19% in 1990-92 to 13% in 2010-12 FAO: 870 million people undernourished. Including 100m children under 5


>850 surveys, 127 LDCs; PovcalNet (WB)


Gallup poll version


Poverty in China: Gallup results


Sustainable development goals (SDGs): Why? Clarify what developed countries can do (Mohieldin

2013) Global commons/public goods

Financial architecture / trade / peace & security / environment / communicable diseases / knowledge / statistical capacity

ODA: more, more effective Clarify what LDCs can do

Institutional quality Targeting Financial sector deepening / inclusion Tax effort and equity

U.N. Open Working Group on SDGs

Consensus: SDGs yes, …


OWG“Eradication of poverty in all its forms remains the overriding priority and a necessary condition for sustainable development.”

Pogge & Rippin“… broad agreement that the fight against poverty ought to take centre stage in any new development agenda.”

World Bank“Working for a world free of poverty”Propose: Reduce headcount poverty rate to 3% by 2030

Remember: One reason is to target interventions

… and poverty still central

Targeting Example: Social Protection in Indonesia

Context:12% poor (29 million out of 240 million)

Post Asian Financial Crisis (1997) strategy:Food; jobs; access to health, education; credit for small enterprises. [Basri & Papanek]

Political support for targeting poverty

National Team for the Acceleration of Poverty Reduction (TNP2K), VP. Think tank


High leakage currently:

Modest programsTargeting not great


Raskin: Rice for the poor. Also conditional cash transfers; and PNPM (cash for work)

Indonesia: New Effort to Identify the Poor

Poverty mapping: identify poor areasConstruct proxy means testing methods

By district (n=500); based on detailed survey dataIndex = f(housing info, assets, hhsize, education, work status, …)

Collect data on proxiese.g. 43% of households, 2011; + census data; + local community data.

Identify poor, unify database, issue cards.Allow system for appeals; revisions; updates

Are SDGs needed to promote such initiatives?



Goal: 3% by 2030?

Chandy, Ledlie, Panciakoa, 2013

2030: 2/3 poor in fragile states


“Growth is good for the poor” (Dollar & Kraay 2002)

Refers to monetary poverty


Inequality is bad for the poor (Ravallion)

Getting to 3% will be hard







Outline


Basics: What is poverty?

“pronounced deprivation in well-being”Monetary approach

Emphasize “command over commodities”; individuals then make choices. Based on income or expenditure. Excludes non-market items (e.g. public services, liberties).

Multiple poverties Food poor; shelter poor; health poor; education poor.

More paternalistic.Capabilities

Sen: poverty is lack of capability to function in society. Can lack income, education, health, security, self-confidence, liberties. “Multidimensional”


Measure wellbeing using income or consumption/capita

Or per adult equivalent

Pick poverty line Often linked with caloric needs plus non-food essentials

Aggregate: Foster-Greer-Thorbecke

Conventional approach


Other measures

Sen-Shorrocks-Thon

Watts

Time Taken to Exit


Choice of measure matters only a little for ranking (#6 here)


International Comparisons: WB/Chen & Ravallion

1. Pick poverty lineBased on basic needs lines in poorest countriesUSD1.25/person/day in 2005 prices Appropriate?

2. Use PPP exchange rate: get poverty line in local currency for some specified year Accurate?

3. Use CPI to create poverty line in nominal local currency, annually since 1981 Poor basket?

4. Measure poverty rate from survey data; if necessary estimate using Lorenz curves

5. Interpolate poverty rates for intervening years6. Aggregate to get world poverty rate

Pogge & Reddy: Use basic needs country by country?


Focus on chronically poor?

Types of poverty (measured with panel data)A. Chronically poor: = average consumption < zB. Persistently poor: consumption always < z

Subset of chronically poor

C. Transient poor: consumption sometimes < z, but not on average

D. Never poor: consumption never < z

Goal: End chronic poverty?Matters for targeting (given high mobility):

A, B need income; C needs insurance.


Transition Matrix: quintiles


Types of poverty in 4 Chinese provinces







Outline


Alkire and Santos 2012 Some needs not supplied by markets Capacity to convert income into functionings differs (e.g.

health) Poor people mention other needs

Sen 1999Poverty is “deprivation of basic capabilities rather than merely the lowness of incomes”

Nussbaum 2003Life expectancy / health & basic needs / freedom from violence / education and opportunities / emotional health & freedom from fear / mental health / social inclusion & freedom from discrimination / healthy environment & nature / leisure / political participation

Is poverty multidimensional?


Alkire & Sumner 2013Use a multidimensional poverty index, not P0

Headline MPI 2.0?


AF Multidimensional Poverty Index: Mechanics

1. Pick dimensions of deprivation e.g. schooling, health, electricity

2. Set cutoffs (“poverty lines”) for eache.g. Less than 5 years of schooling

3. Select weights for each dimension4. Count (weighted) deprivations per person5. Define the poor

e.g. at least 3 deprivations; or deprived on at least 0.5 of weighted dimensions

6. Measure poverty: MPI = H × AH is % who are poor (“headcount”); A is average proportion of deprivations per poor person.

Duclos et al. (2001)“No single such index [MPI aggregation] has been devised that has received unanimous approval”


Example (Alkire and Foster method)

Note: In this example, poverty is defined as having at least two deprivations.

Achievement matrix Deprivation matrix Censored deprivation matrixDimension Dimension # Dimension #

Individual A B C D Individual A B C D Individual A B C D1 13.1 14 4 1 1 0 0 0 0 0 1 0 0 0 0 02 15.2 7 5 0 2 0 1 0 1 2 2 0 1 0 1 23 12.5 10 1 0 3 1 1 1 1 4 3 1 1 1 1 44 20 11 3 1 4 0 1 0 0 1 4 0 0 0 0 0

Cutoff 13 12 3 1 H = 2/4 = 0.5 = 50% A = avg(2/4,4/4) = 0.75MPI = 50% * 0.75 = 0.375.


UNDP implementation

Mirrors HDI. Ten indicators (with weights) Education

Yrs schooling. Deprived if no one has 5 or more. (1/6) School attendance. Deprived if not at school to class 8 (1/6)

Health Child mortality. Deprived if any child died. (1/6) Nutrition. Deprived if any household member malnourished (1/6)

Standard of living. Deprived if No electricity (1/18); no improved sanitation (1/18); no access to

safe drinking water (1/18); dirt floor (1/18); cooks with wood/charcoal (1/18); has no more than one consumer durable such as radio, phone, bike, etc. (1/18)

Poor if deprived in at least 1/3 of (weighted) indicators


Selected MPIs

Source: UNDP, Human Development Report 2013

Population in multidimensional poverty

Contribution of deprivation to overall poverty

Population in povety

Multidimensional poverty index

Headcount Intensity Education Health Living Standards

PPP $1.25 per day

National pov line

Year Value % 000 % % % % % %

Russia 2003 (W) 0.005 1.3 1,883 38.9 84.2 2.5 13.3 0.0 11.1 Thailand 2005/2006 (M) 0.006 1.6 1,067 38.5 40.7 31.2 28.1 0.4 8.1 Sri Lanka 2003 (W) 0.021 5.3 1,027 38.7 6.3 35.4 58.3 7.0 8.9 Morocco 2007 (N) 0.048 10.6 3,287 45.3 35.5 27.5 37.0 2.5 9.0 China 2002 (W) 0.056 12.5 161,675 44.9 64.8 9.9 25.2 13.1 2.8 South Africa 2008 (N) 0.057 13.4 6,609 42.3 7.5 50.5 42.0 13.8 23.0 Iraq 2006 (M) 0.059 14.2 3,996 41.3 47.5 32.1 20.4 2.8 22.9 Indonesia 2007 (D) 0.095 20.8 48,352 45.9 15.7 50.6 33.8 18.1 12.5 Ghana 2008 (D) 0.144 31.2 7,258 46.2 32.1 19.5 48.4 28.6 28.5 Cambodia 2010 (D) 0.212 45.9 6,415 46.1 22.1 32.7 45.1 22.8 30.1 Kenya 2008/2009 (D) 0.229 47.8 18,863 48.0 12.7 30.1 57.2 43.4 45.9 India 2005/2006 (D) 0.283 53.7 612,203 52.7 21.8 35.7 42.5 32.7 29.8 Senegal 2010/2011 (D) 0.439 74.4 7,642 58.9 31.8 40.6 27.6 33.5 50.8 Ethiopia 2011 (D) 0.564 87.3 72,415 64.6 25.9 27.6 46.5 39.0 38.9 Niger 2006 (D) 0.642 92.4 12,437 69.4 35.4 21.5 43.2 43.6 59.5







Outline


MPI = 6.40 + 0.53 P0 R2 = 0.55

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Case: Urban Poverty in Vietnam

% poor based on income/capita: HCMC: 2.1% Hanoi: 4.6% Residents: 3.0% Migrants: 2.6%

Multidimensional poverty: 8 dimensions Income; education; health; access to social security; housing

quality; housing services; social inclusion; physical safety At least 3 deprivations (k=3):

Headcount (H): HCMC: 28% Hanoi: 15%

Adjusted poverty headcount (MPI): HCMC: 12% Hanoi: 6%

Adjusted poverty headcount (MPI): Residents: 3% Migrants: 14%

UNDP & Statistical Offices: Urban Poverty Assessment, 2010


Multidimensional Poverty Index

The norm in Mexico (2009), Colombia (2011)Challenges:

Data Ideally, extensive survey data In practice: UNDP implementation uses DHS (USAID/UN),

MICS (UNICEF), WHS (WHO), and excludes income What weights? [Contrast with prices] What series, thresholds, overall poverty cutoff? Atkinson & Lugo (2010, p. 14): “A multi-dimensional

approach risks, however, diluting the message.” [Dashboard]







Outline


Aside: Is There a Middle Ground?

Dashboard shows marginal distributions onlyMPI weights are problematicNeed to examine the joint distribution of poverty

dimensions Which country is poorer?

A, if marginals are used (or union approach) B, if joint distribution is used (and intersection approach)


Diagram covers 120.3 m (total pop: 498 m in 2008)

Source: Atkinson & Marlier (eds.), 2010

Is poverty rate: 6.9 m (1.4%)? 51.8 m (10.4%)? 120.3 m (24.1%)?


Bourguignon & Chakravarty (2003) CES aggregation of poverty gaps for different

dimensions Requires continuous data Requires weights and measures of substitutability

Unmet Poverty Gap approach Was common in Latin America; # deprived on 1, 2, 3,

… dimensions Szekely: weights vary (“Voices of poor”)

Income: 2.4 Child attends school: 1.8 Education of head of household; sanitation: 0.6 each Water; shelter: 0.6 each

Other measures







Outline


Monitoring requires dataData availability incomplete (Mohieldin)

Data availability is not yet adequate

2005 2010

%

LDCs without enough data to measure trend in

Poverty 63 39

Malnutrition 50 36

Water 35 8

LDCs with poverty estimate < 5 years old

68 54


Mohieldin (2014)


De Weerdt et al. (2014) FAO hunger measure: Food balance sheet + survey

data on expenditure or income distribution Use household data directly

But then details matter – results are very fragile

Measuring Hunger


Model Recall Food items

N Kcal/cap % hungry

1 14 days 58 504 1,793 68

2 7 days 58 504 2,129 48

3 7 days 17 504 2,066 48

4 Year 58 504 1,909 59

5: hh diary 14 days 58 503 2,413 27

6: hh diary, few visits

14 days 58 503 2,520 23

7: indiv. diary 14 days 58 503 2,677 19

Tanzania food adequacy studies

7 randomly-chosen samplesDetails matter!Need for standardization







Outline


For goal 1 of SDGs, use a monetary poverty target 5% by 2030? Halve $2/day line? 3% chronic poor? Complement with other development goals

i.e. don’t use MPI; would be double use of multidimensions i.e. dashboard approach

Donor support for surveys Link with administrative data Improve price data Standardize protocols for measuring, comparing,

spending, especially on food

Recommendations

setting the post-2015 development agenda: is multidimensional poverty measurable?

Documents

measure poverty

owgeradication of poverty

extreme poverty

headcount poverty rate

gallup resultspostmdgs

millennium development

new development agenda

proportion of people