Publication: October 2022 Update to the Multidimensional Poverty Measure: What’s New
Nguyen, Minh Cong
The World Bank’s Multidimensional Poverty Measure (MPM) presents a broader understanding of poverty beyond just the monetary dimension by incorporating access to education and basic infrastructure as additional dimension of well-being. It aims to thus highlight additional deprivations experienced by poor households beyond the monetary headcount ratio at the 2.15 dollars international poverty line. To estimate the MPM in a standard way for as many countries as possible, data limitations result in a trade-off between the number of dimensions that can be included and the number of countries that have the required harmonized indicators. Both education and access to basic infrastructure are generally available in household surveys across the world. The World Bank’s measure takes inspiration and guidance from other prominent multidimensional measures, particularly the Multidimensional Poverty Index (MPI) developed by UNDP and Oxford University. The MPM and MPI differ in one important aspect: the MPM includes the monetary poverty dimension, measured as having household income or consumption per capita that is less than 2.15 dollars per day, the new International Poverty Line at 2017 PPPs published by the World Bank in 2022. A focus on non-monetary deprivations for the income-poor highlights to policymakers the importance of improving other aspects of human welfare that may not be well-captured by the monetary measure alone. For example, households that are income poor as well as deprived in non-monetary dimensions face worse levels of well-being than households that are only income poor but have good access to services and education. It is also useful to measure deprivations in basic services faced by non-income-poor households, including households that leave extreme poverty but continue to experience nonmonetary deprivations, as these households face different constraints to well-being. A poverty measure that includes nonmonetary aspects thus highlights deprivations that may otherwise remain hidden. Securing higher living standards for a population becomes more challenging when poverty in all its forms is considered, but it can provide policymakers a roadmap for and a means of monitoring improvements in welfare.
“Diaz-Bonilla, Carolina; Sabatino, Carlos; Wu, Haoyu; Nguyen, Minh Cong. 2022. October 2022 Update to the Multidimensional Poverty Measure : What’s New. Global Poverty Monitoring Technical Note;26. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/38203 License: CC BY 3.0 IGO.”