A new approach to poverty

By Kamma Thordarson

30 November 2010 [MediaGlobal]: In order to discuss or alleviate poverty, we must first define it. The 20th anniversary edition of the Human Development Report (HDR), released on the fourth of November 2010 at the United Nations Headquarters, offers a new way to define poverty and who lives in it. Twenty years ago, the original HDR was groundbreaking because its authors, Mahbub ul-Haq and Amartya Sen insisted that growth should be measured in terms of human welfare rather than national income.

Today the HDR continues to challenge conventional wisdom. This anniversary edition introduces the Multidimensional Poverty Index (MPI). The MPI defines those who are deprived of basic resources relating to health, education and standard of living, as living in multidimensional poverty. According to this definition, those who are deprived in 30 percent of the dimensions are poor. This is different from “extreme poverty”, which defines people as poor if they receive less than $1.25 a day as their salary and is measured by the World Bank’s “a dollar a day” index.

In an interview with MediaGlobal, Jeni Klugman, Director of the Human Development Report Office, United Nations Development Programme and lead author of the 2010 HDR, said, “I think the motivation in going beyond income poverty and the sorts of estimates presented by the World Bank is reasonably clear.”

Offering the MPI as a complementary measure to the World Bank’s dollar a day index, Klugman added “it shows in fact that poverty in a real sense is much more serious and much more widespread than what the dollar a day suggests, there are persistent deprivations even when income poverty declines. Of course some governments don´t like it much because what it shows is that their multidimensional poverty rate is much higher than their income poverty rate.”

According to the 2010 HDR, 1.75 billion people currently live in multidimensional poverty, 421 million of them live in eight Indian states. The World Bank estimates that 1,44 billion people live in extreme poverty worldwide. A government searching to alleviate poverty must decide how to target its resources. The goal of alleviating income poverty is different from the goal of alleviating multidimensional poverty; each goal requires its own set of measures.

Mexico was one of the first countries to embrace the concept of a multidimensional poverty index. In 2004, The National Council for the Evaluation of Social Development Policy (CONEVAL) was assigned the task of monitoring multidimensional poverty at a national level in order to target government resources with the goal of evaluating social policy.

Sabina Alkire, Director of the Oxford Poverty and Human Development Initiative, who developed the Multidimensional Poverty Index told MediaGlobal, “Income is vital but it doesn’t tell the whole story. Also, income changes quite slowly whereas the MPI can show changes immediately and can target people whose lives are battered by low education, malnutrition, and poor housing at the same time. You can also zoom in through the index and see more. With multidimensional poverty measures we can figure out how people are poor and what kind of remedies will help their situation the most.”

The Multidimensional Poverty Index offers new insight to poverty, continuing the Human Development Report’s tradition of focusing on the people rather than money. Moving the approach to the household level, the Multidimensional Poverty Index gives a more thorough estimation of people´s circumstances than the Human Development Index did with its national figures. It enriches the measures of income poverty from the World Bank. As Klugman said “We feel that money is obviously important and can constrain peoples choices but there are a whole lot of ways which people can be deprived and we´re kind of missing that in just a dollar a day figure.”