Multidimensional Poverty

Featuring
James Foster
George Washington University

With discussant
Martin Ravallion
Development Research Group, World Bank

Twenty-five years ago, James Foster's influential work with Joel Greer and Erick Thorbecke helped define the way the world measures poverty.  Foster will present his recent work on the theory of how to measure poverty when we care not only about income but also other dimensions of well-being such as health and education.  Martin Ravallion, Director of the Development Research Group at the World Bank, is the author of a new essay that criticizes the idea of a single multidimensional index. He will argue instead that multiple indicators should be tracked separately.

*The Massachusetts Ave. Development Seminar (MADS) is a ten year-old research seminar series that brings some of the world’s leading development scholars to discuss their new research and ideas. The presentations meet an academic standard of quality and are at times technical, but retain a focus on a mixed audience of researchers and policymakers.

Download Counting and Multidimensional Poverty Measurement by James Foster
Abstract: This paper proposes a new methodology for multidimensional poverty measurement consisting of an identification method ρk that extends the traditional intersection and union approaches, and a class of poverty measures Mα. Our identification step employs two forms of cutoff: one within each dimension to determine whether a person is deprived in that dimension, and a second across dimensions that identifies the poor by ‘counting’ the dimensions in which a person is deprived. The aggregation step employs the FGT measures, appropriately adjusted to account for multidimensionality. The axioms are presented as joint restrictions on identification and the measures, and the methodology satisfies a range of desirable properties including decomposability. The identification method is particularly well suited for use with ordinal data, as is the first of our measures, the adjusted headcount ratio. We present some dominance results and an interpretation of the adjusted headcount ratio as a measure of unfreedom. Examples from the US and Indonesia illustrate our methodology

Download Multidimensional Indices of Poverty by Martin Ravallion
Abstract: The contribution of recently proposed “multidimensional indices of poverty” may not be as obvious as one thinks. The paper argues that there are two key issues in assessing that contribution: whether one believes that any single index can be a sufficient statistic for credible poverty assessments; and whether, when aggregation is called for, one chooses to do so in the “attainment space” or the “deprivation space.” After explaining these differences, the paper critically reviews the arguments made for multidimensional indices of poverty and their relevance to antipoverty policy. The paper argues in favor of “multiple indices of poverty” appropriate to each setting, rather than a single “multidimensional index of poverty.”