Multidimensional Poverty Indices: A Critical Assessment

Abstract

This paper reviews and assesses issues involved in the measurement of multidimensional poverty, in particular the soundness of the various “axioms” and properties often imposed on poverty indices. It argues that some of these properties (such as those relating poverty and inequality) may be sound in a unidimensional setting but not so in a multidimensional one. Second, it addresses critically some of the features of recently proposed multidimensional poverty indices, in particular the Multidimensional Poverty Index (MPI) recently put forward by the United Nations Development Program (UNDP). The MPI suffers from several unattractive features that need to be better understood (given the prominence of the index). The MPI fails in particular to meet all of three properties that one would expect multidimensional poverty indices to obey: continuity, monotonicity, and sensitivity to multiple deprivation. Robustness techniques to address some of the shortcomings of the use of such indices are briefly advocated.

Keywords: Multidimensional poverty; United Nations Development Program; Poverty; Inequality

JEL Classification: D31, D63, I32, O15