An assessment standard can help identify, target, monitor and assess poverty in all its forms
RR Prasad | October 26, 2016
Ending poverty is one of the 17 global goals that make up the 2030 agenda for sustainable development. Eradicating poverty in all its forms, including extreme poverty, is the greatest global challenge and an indispensable requirement for sustainable development. Poverty reduction and sustainable development are inseparable as poverty reduction is the premise for sustainable development. Poverty reduction and sustainable development supplement each other. Poverty reduction covers many fields such as health, education, women protection and environment. From this perspective, poverty is a multidimensional phenomenon.
The goal of sustainable development is to end poverty in all its forms everywhere. To this end, India needs to develop two kinds of poverty assessment standards. The first is for income poverty measured by currency, and the other is multidimensional poverty assessment standard reflecting the levels of education, health, housing and living standards. Only when the two standards are combined can we really identify, target at, monitor and assess poverty in all its forms.
Poverty can be reduced or made more severe as a result of a range of decisions or situations related to economic development, such as investment and job creation; distribution of wealth, through social protection schemes, for example access to services, such as education and health care; mitigation of the effects of climate change and disasters; and peace and security. How the root causes of poverty are understood also has a bearing on how phenomena such as income poverty versus multidimensional poverty are measured.
Since 2010, UN Development Programme (UNDP) has been publishing the multidimensional poverty index (MPI), the components of which are deprivations in health, education and standard of living at household and individual levels. MPI is constructed using the same data source across indicators for a given country.
Multidimensional poverty assessments aim to measure the non-income based dimensions of poverty to provide a more comprehensive assessment of the extent of poverty and deprivation. The MPI is published by the UNDP’s Human Development Report Office and tracks deprivation across three dimensions and 10 indicators: health (child mortality, nutrition), education (years of schooling, enrollment), and living standards (water, sanitation, electricity, cooking fuel, floor, assets).
The MPI first identifies which of these 10 deprivations each household experiences, then identifies households as poor if they suffer deprivations across one-third or more of the weighted indicators.
Based on the Alkire Foster methodology, the MPI is created by multiplying two numbers: the percentage of population who are poor and the average percentage of the weighted indicators that poor people experience (intensity). Including intensity provides an incentive to reach the poorest of the poor. The MPI reflects those in acute poverty; alternative cut-offs are used to report those who are vulnerable and those in severe poverty.
An MPI is very important [see ‘Multidimensional Poverty in the SDGs’, Oxford Poverty & Human Development Initiative (OPHI)] for poverty eradication as it (a) makes acute poverty visible in multiple dimensions (b) provides a clear, informative poverty headline (c) monitors change and reflects effective policy interventions quickly (d) shows the interconnected deprivations poor people experience (e) enables policy coordination, not a silo approach (f) provides incentives to target the poorest by tracking changes in intensity of poverty (g) may be linked to environmental or other variables (h) displays success in leaving no one behind through direct disaggregation – and celebrates success (i) and compares non-monetary deprivations directly, independent of price or currency.
At a minimum the ‘MPI 2015’ would track extreme deprivation in nutrition, health, education, water, sanitation, clean cooking fuel, and reliable electricity, to show continuity with Millennium Development Goal (MDG) priorities. More specifically it would reflect the deprivations like: adult or child malnourishment; disrupted or curtailed schooling (a minimum of 1-8 years); the absence of any household member who has completed six years of schooling; child mortality within the household within the last five years; lack of access to safe drinking water; lack of access to basic sanitation services; lack of access to clean cooking fuel; lack of basic modern assets (radio, TV, telephone, computer, bike, motorbike, etc.); and lack of access to reliable electricity.
Potential additional indicators to reflect the Sustainable Development Goals (SDGs) include work; housing; violence; social protection; quality of schooling; health system functioning; teenage marriage or pregnancy; solid waste disposal; birth registration; and internet access.
Although it might seem preferable to determine multidimensional poverty based on deprivation in any indicator, previous MPIs have found considerable abnormalities in using only one deprivation, partly because of cultural and climactic diversity, and partly because the scale of these deprivations varies widely. Determining poverty levels in a country like India on the basis of any single deprivation would result in poverty rates above 90 percent, potentially obscuring the considerable progress that has been made in one or more areas and disincentivising political action.
Therefore, using the Alkire and Foster method of calculation and setting a threshold of multiple deprivations have been recommended, to determine who is or is not considered poor. Establishing the thresholds will require participatory discussions as well as expert consultation. Complementary national and regional MPIs could also be designed for specific contexts, as Mexico, Colombia, Philippines, South Africa and Bhutan have done.
India is a country with striking differences in the incidence of poverty based on the poverty line chosen. When MPI is used, more than half the population is considered to be living in multidimensional poverty, whereas, based on the national poverty line (2011) and the international poverty line, the monetary poverty headcount figures remain at 21.9 and 23.6 percent respectively [see, ‘Statistical Yearbook for Asia and the Pacific 2015’, United Nations ESCAP].
The MPI 2015+, supported by a data revolution, can help to eradicate extreme poverty by complementing income poverty measures and shining a high-resolution lens on poverty, showing who is poor and how they are poor, helping to ensure that the SDGs “leave no one behind”.
The building blocks of the MPI are direct measures of the overlapping deprivations poor people experience simultaneously. The MPI is calculated by multiplying the incidence of poverty (H) – the percentage of people who are poor – by the intensity of poverty (A) – the extent of simultaneous deprivations poor people experience. MPI = H x A.
The methodology for measuring multidimensional poverty, known as the Alkire Foster (AF) method, involves counting the different types of deprivation – or indicators of poverty – that individuals experience at the same time, such as a lack of education or employment, or poor health or living standards, and can be used to construct an MPI. It is designed to complement traditional income poverty measures, recognising that the deprivations experienced by the poor extend beyond a lack of money.
In order to measure poverty in all its forms, the MPI should be included for a number of reasons. The index provides the only comprehensive measure available for non-income poverty, which has become a critical underpinning of the SDGs.
Besides adopting the methodology for measuring multidimensional poverty, it would also be desirable to reorganise the ministry of rural development (MoRD) in a manner that it encompasses all the forms of poverty or the important ingredients of the multi-dimensional poverty. This would require certain ameliorative and some transformative changes within the existing ministry and in some other ministries from where some subject matters will have to be transferred to the ministry of integrated and sustainable development (MISD); the new name for the reorganised MoRD.
Only by adopting an integrated perspective on poverty, we can eradicate poverty in all its forms. It would also be desirable to decentralise the MISD into Zonal Hqrs. e.g. East, West, North, West, Coastal and Island, Hilly and Border areas, etc. with a view to enabling the government to adopt a regional and local perspective on poverty and develop and implement such strategies for poverty eradication which suit the local situation. This approach would pave the way for localisation of development.
Prof Prasad is associated with the National Institute of Rural Development and Panchayati Raj, Hyderabad.
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