Measuring poverty’s multiple dimensions: New guidance for countries developing Multidimensional Poverty Measures

Traditionally, the World Bank has reported and provided advice on poverty measurement through the income and consumption expenditure measures. This approach looks at a monetary minimum threshold required to purchase a basket of essential goods and services.

Over the last few decades, economists, policymakers, and researchers’ debates have focused on the importance of looking at wellbeing through a broader lens, thus incorporating in the measurement of poverty aspects of life such as access to quality education, healthcare, or sanitation in addition to monetary measures. Substantial deprivation in these areas can lead to what is now commonly referred to as multidimensional poverty. Multidimensional poverty was officially adopted by the UN as one of the Sustainable Development Goals (SDG) indicators in 2017, and is defined as “SDG 1.2.2: Proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions.” Unlike most other indicators in the Global SDG Indicator Framework, SDG 1.2.2 doesn’t follow a globally mandated methodology, and each country is therefore expected to define and report its own national measure of multidimensional poverty.

As partner agencies supporting member states in their custodianship of SDG 1.2.2., UNDP, UNICEF, and the World Bank worked together to enable reporting of official measures of national multidimensional poverty, through a platform established in April 2020. So far, national multidimensional poverty data for more than 63 countries are available in the United Nations Global SDG Indicator Database, an open data repository tracking country progress on the 2030 Agenda.

The three agencies have jointly produced a Roadmap for governments seeking to design and adopt a national measure of multidimensional poverty. The document presents possible avenues and a roadmap for approaching the process: the rationale for developing such measure, an overview of the main approaches, and a general guideline for the steps to follow. Several real country examples are presented to highlight the different possible outcomes of the decision-making process required to adopt a successful national measure of multidimensional poverty. The Roadmap also takes stock of the dimensions and indicators adopted by different countries so far, for measures of both adult and child multidimensional poverty.
 

How is multidimensional poverty measured?

There is no single formula that is universally accepted as official. Furthermore, the areas of deprivation (dimensions) and the types of data used to calculate multidimensional poverty (data sources) vary greatly from country to country as they are very specific to each context. While some early adopters have now published several rounds of multidimensional poverty data, the majority of countries are yet to introduce this type of measurement and many are in exploratory phases to put one in place.

Despite dissimilarities in their design across countries, there are several established approaches that have been adopted and adapted successfully.
 

Is Multidimensional Poverty a one-size-fits-all measure?

No. It is understood that significant adaptation is required to ensure that measures of multidimensional poverty are fit for purpose in different contexts. In addition, children experience poverty differently from adults and therefore have different needs—in terms of nutrition or education, for example—that countries might take into account through a specific measure of child multidimensional poverty, which may incorporate different dimensions and indicators to the country’s measure of multidimensional poverty for the general population.
 

So how to get started?

Designing a national measure of multidimensional poverty is a process that involves several important decisions at various levels of government. Broadly speaking, the process can be broken down into six steps:

1. Identifying the measurement unit (household or individual, children or adults, or everyone);
2. Selecting dimensions and measurable indicators relevant to how poverty can be experienced in the country context;
3. Defining of thresholds for each indicator to determine when a person (or household) would be considered deprived;
4. Adding up the deprivations across indicators for each person (or household).
5. Defining who is considered multidimensionally poor by selecting a “poverty cut-off” related to the number of deprivations a person (or household) has.
6. Adding up the number of persons (or households) considered to be multidimensionally poor.

Intended as an accessible document that can easily be read and understood, the Roadmap presents a detailed overview of these steps and offers extensive references for any country wishing to get started in the process of designing a national measure of multidimensional poverty. It does so through a literature review of theoretical perspectives which have practical applications and offers opportunities to learn from other countries’ experiences.

As partner agencies for SDG Indicator 1.2.2, the World Bank, UNDP, and UNICEF are committed to working closely with national statistical offices and relevant national entities to strengthen capacities to produce high-quality national measures of multidimensional poverty and to assist them in meeting the data reporting requirement of the global SDG indicator framework.