Seminar on Multidimensional Poverty Index

1. Multidimensional Poverty
Index
Presenters: Dhinu & Isaac
Moderator: Prof Brogen Singh Akoijam
Date: 27 March 2024
SEMINAR

2. OUTLINE OF PRESENTATION
• MPI progress India
• MPI progress Manipur
• Criticisms
• Way forward
• References
• Poverty
• Different types of measures
• History of poverty
measurement in India
• Global MPI
• Indian MPI

3. Introduction
• Poverty is “pronounced deprivation in well-being” (World Bank)
• It includes low incomes and inability to acquire basic goods and
services necessary for survival with dignity
• World Bank's estimates (2021), around 9.2% of the world's
population lived in extreme poverty
• Sub-Saharan Africa has highest poverty rates – over 40% living
in extreme poverty in some countries

4. END POVERTY IN ALL ITS FORMS EVERYWHERE
1.1 Eradicate extreme poverty
1.2 Reduce poverty in all dimensions by 50%
1.3 Implement social protection systems
1.4 Equal rights to ownership, basic services, technology and economic
resources
1.5 Build resilience to environmental, economic and social disasters
1.6 Mobilize resources to implement policies to end poverty
1.7 Create pro-poor and gender-sensitive policy frameworks

5. Measurements of poverty

6. • Income-Based Measures
 Assess poverty primarily based on income levels
• Consumption-Based Measures
 Assess poverty by examining individuals' or households' consumption
patterns rather than their income
• Multidimensional Measures
 Consider various dimensions of well-being beyond income, such as
access to education, healthcare, housing, and social services

7. • Absolute poverty line
 In terms of a fixed income threshold below which individuals or
families are considered to be lacking the resources
 World Bank's international poverty line of $2.15 per day
• Relative poverty
 Compare an individual or household's income or resources to the
average income or resources of the overall population
 The European Union - a threshold of 60% of the median income

8. • Income inequality matrix
 Measures such as the Gini coefficient or the Palma ratio
• Subjective Poverty Measures
 Individuals' perceptions of their own economic status and well-being
• Human poverty index (HPI), UNDP 1997
 Incorporates indicators related to longevity, knowledge, standard of
living
 Developed by UNDP as alternative to purely income-based measures

9. Dadabhai Naoroji
1901
1938
National Planning Committee
Bombay Plan
1944
1962
Working group
YK Alagh Committ
1979
Lakda
History of poverty measurement in India

10. lan
1962
Working group
YK Alagh Committee
1979
1993
Lakdawala committee
Tendulkar Committee
2009
2014
Rangarajan
MPI Coord
History of poverty measurement in India

11. gh Committee
1979
1993
Lakdawala committee
Tendulkar Committee
2009
2014
Rangarajan
MPI Coordination Committee
2020
History of poverty measurement in India

12. Global
Multidimensional
Poverty Index
• Released by UNDP and OPHI,
initiated in 2010
• Based on Alkire-Foster methodology
• Three equally weighted dimensions
• Deprived in a third or more of ten
indicators, “MPI poor”
• Presents not just the extent of poverty,
but also the depth of poverty

13. Global
Multidimensional
Poverty Index
• More direct and comprehensive
measure of poverty
• Captures and reveals the outcome of
economic growth and development
• It has been globally realised that non-
monetary measures complement
monetary measures to capture diverse
dimensions of poverty

14. Dimensions
and Indicators
in the
Global MPI

15. Global Indices for Reforms and Growth (GIRG)
• GoI has decided to leverage select Global Indices to drive
reforms and growth across the country
• These Indices are divided across four categories – Industry,
Development, Economy and Governance
• Under the GIRG mandate, NITI Aayog has been identified as
the nodal agency for the Multidimensional Poverty Index

16. Global Indices for Reforms and Growth (GIRG)
• GoI has decided to leverage select Global Indices to drive
reforms and growth across the country
• These Indices are divided across four categories – Industry,
Development, Economy and Governance
• Under the GIRG mandate, NITI Aayog has been identified as
the nodal agency for the Multidimensional Poverty Index

17. Why use MPI?
• A refined policy tool for data-driven decision-
making and the formulation of sectoral policies at
the sub-national level
• Provides more nuanced perspective: can
analyze up to district level

18. Why use MPI?
• Enables more accurate interventions to address
acute poverty
• Uphold principle of inclusivity, ensure that “no
one is left behind”
• Method for determining overlapping deprivations

19. Global
versus
National
MPI
Global National
Health
Nutrition
Child mortality
Nutrition
Child-adolescent mortality
Maternal health
Education
Years of schooling
School attendance
Years of schooling
School attendance
Standard
of living
Cooking fuel
Sanitation
Drinking water
Electricity
Housing
Assets
Cooking fuel
Sanitation
Drinking water
Electricity
Housing
Assets
Bank account

20. Indicators in the National MPI
Dimension Weight Deprivation indicator
Health (1/3)
1/6 Nutrition
1/12 Child-adolescent mortality
1/12 Maternal health
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
1/21 Cooking fuel

21. Indicators in the National MPI
Dimension Weight Deprivation indicator
Health (1/3)
1/6 Nutrition
1/12 Child-adolescent mortality
1/12 Maternal health
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
1/21 Cooking fuel
Any child 0 to 59 months,
or woman 15 to 49 years,
or man 15 to 54 years - is
found to be undernourished

22. Indicators in the National MPI
Dimension Weight Deprivation indicator
Health (1/3)
1/6 Nutrition
1/12 Child-adolescent mortality
1/12 Maternal health
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
1/21 Cooking fuel
A child/adolescent under 18
years of age has died in the
family in the five-year period
preceding the survey

23. Indicators in the National MPI
Dimension Weight Deprivation indicator
Health (1/3)
1/6 Nutrition
1/12 Child-adolescent mortality
1/12 Maternal health
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
1/21 Cooking fuel
Any woman in the household who has given
birth in the 5 years preceding the survey, has
not received at least 4 antenatal care visits
for the most recent birth or has not received
assistance from trained skilled medical
personnel during the most recent childbirth

24. Indicators in the National MPI
Dimension Weight Deprivation indicator
Health (1/3)
1/6 Nutrition
1/12 Child-adolescent mortality
1/12 Maternal health
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
1/21 Cooking fuel
Not even one member of the household
aged 10 years or older has completed
six years of schooling

25. Indicators in the National MPI
Dimension Weight Deprivation indicator
Health (1/3)
1/6 Nutrition
1/12 Child-adolescent mortality
1/12 Maternal health
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
1/21 Cooking fuel
Any school-aged child is not attending
school up to the age at which he/she
would complete class 8

26. Calculation of MPI
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
Standard of
living (1/3)
1/21 Cooking fuel
1/21 Sanitation
1/21 Drinking water
1/21 Electricity
1/21 Housing
1/21 Assets
1/21 Bank account
A household cooks with dung,
agricultural crops, shrubs,
wood, charcoal or coal

27. Calculation of MPI
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
Standard of
living (1/3)
1/21 Cooking fuel
1/21 Sanitation
1/21 Drinking water
1/21 Electricity
1/21 Housing
1/21 Assets
1/21 Bank account
The household has unimproved or no
sanitation facility or it is improved but
shared with other households

28. Calculation of MPI
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
Standard of
living (1/3)
1/21 Cooking fuel
1/21 Sanitation
1/21 Drinking water
1/21 Electricity
1/21 Housing
1/21 Assets
1/21 Bank account
The household does not have access
to improved drinking water or safe
drinking water is at least a 30-minute
walk from home (as a round trip)

29. Calculation of MPI
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
Standard of
living (1/3)
1/21 Cooking fuel
1/21 Sanitation
1/21 Drinking water
1/21 Electricity
1/21 Housing
1/21 Assets
1/21 Bank account
The household has no electricity

30. Calculation of MPI
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
Standard of
living (1/3)
1/21 Cooking fuel
1/21 Sanitation
1/21 Drinking water
1/21 Electricity
1/21 Housing
1/21 Assets
1/21 Bank account
The household has inadequate housing: the
floor is made of natural materials, or the roof
or wall are made of rudimentary materials

31. Calculation of MPI
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
Standard of
living (1/3)
1/21 Cooking fuel
1/21 Sanitation
1/21 Drinking water
1/21 Electricity
1/21 Housing
1/21 Assets
1/21 Bank account
The household does not own more than one
of these assets: radio, TV, telephone,
computer, animal cart, bicycle, motorbike, or
refrigerator, and does not own a car or truck

32. Calculation of MPI
Education
(1/3)
1/6 Years of schooling
1/6 School Attendance
Standard of
living (1/3)
1/21 Cooking fuel
1/21 Sanitation
1/21 Drinking water
1/21 Electricity
1/21 Housing
1/21 Assets
1/21 Bank account
No household member has a bank account
or a post office account

33. Calculating the Multidimensional Poverty Index

34. Deprivation cut-off or first order cut-off
• In each indicator, the individuals in a household is given score 1
if categorized as deprived, otherwise 0
• This value is multiplied by the assigned weight to that indicator
• The weighted values are aggregated to get the
multidimensional deprivation score of an individual

37. Poverty cut-off or second order cut-off
• Considered from the total deprivation score for an individual
• The poverty cut-off is 33.33%
• That is, if the total deprivation score is higher than 0.33 then the
individual is classified as multidimensionally poor

38. Poverty cut-off or second order cut-off
• Considered from the total deprivation score for an individual
• The poverty cut-off is 33.33%
• That is, if the total deprivation score is higher than 0.33 then the
individual is classified as multidimensionally poor

39. Poverty cut-off or second order cut-off
• Considered from the total deprivation score for an individual
• The poverty cut-off is 33.33%
• That is, if the total deprivation score is higher than 0.33 then the
individual is classified as multidimensionally poor

40. Head count ratio (H)
• It is the proportion of multidimensionally poor to total population
Uncensored head count ratio
• This is a ratio of total number of individuals classified as
deprived in that indicator to the total population
Censored head count ratio
• Number of multidimensionally poor deprived in a particular
indicator to total population

41. Head count ratio (H)
• It is the proportion of multidimensionally poor to total population
Uncensored head count ratio
• This is a ratio of total number of individuals classified as
deprived in that indicator to the total population
Censored head count ratio
• Number of multidimensionally poor deprived in a particular
indicator to total population
Outlines the broader priorities for intervention
required for the benefit of the entire population

42. Head count ratio (H)
• It is the proportion of multidimensionally poor to total population
Uncensored head count ratio
• This is a ratio of total number of individuals classified as
deprived in that indicator to the total population
Censored head count ratio
• Number of multidimensionally poor deprived in a particular
indicator to total population
Outlines the immediate priorities required to
benefit the multidimensionally poor population
Outlines the broader priorities for intervention
required for the benefit of the entire population

43. Intensity of poverty (A)
• Ratio of total deprivation score of multidimensionally poor to the
total number of multidimensionally poor
Multidimensional Poverty Index (MPI)
𝑴𝑷𝑰 = 𝑯 × 𝑨
• This is the share of multidimensionally poor in the population
adjusted for intensity of poverty

48. 64.8%

49. 64.8%

50. Importance of adjustment
• Traditional poverty measures would remain unaltered if an
individual who is already poor became poorer, or less poor but
not enough to cross the poverty line
• MPI is dependent both on the headcount ratio as well as the
intensity of poverty and therefore may change if the headcount
ratio decreases / increases

51. Deconstruction of Estimates and Indicators
• Estimates by geographical level and population sub-groups
 From Union  State  District
• Contribution of indicators
 Insight into the relative deprivation in a particular indicator

52. Dimension Indicator
Uncensored
Headcount
Censored
Headcount (CH)
Weight
(W)
Contribution =
(CH x W) ÷ M0
Health
Nutrition 31.52% 11.90% 1/6 29.86%
Child-Adolescent Mortality 2.06% 1.18% 1/12 1.48%
Maternal Health 19.17% 9.35% 1/12 11.73%
Education
School Attendance 5.27% 3.63% 1/6 9.10%
Years of Schooling 11.40% 6.63% 1/6 16.65%
Standard
of Living
Electricity 3.27% 1.84% 1/21 1.32%
Drinking Water 7.32% 2.23% 1/21 1.60%
Sanitation 30.13% 9.25% 1/21 6.63%
Housing 41.37% 12.07% 1/21 8.65%
Cooking Fuel 43.90% 12.30% 1/21 8.82%
Assets 10.16% 4.72% 1/21 3.39%
Bank Account 3.69% 1.09% 1/21 0.78%
MPI (M0) = Sum of (CH × W) = 0.066
Contribution of indicators to India’s MPI score – NFHS-5 (2019-21)

53. Dimension Indicator
Uncensored
Headcount
Censored
Headcount (CH)
Weight
(W)
Contribution =
(CH x W) ÷ M0
Health
Nutrition 31.52% 11.90% 1/6 29.86%
Child-Adolescent Mortality 2.06% 1.18% 1/12 1.48%
Maternal Health 19.17% 9.35% 1/12 11.73%
Education
School Attendance 5.27% 3.63% 1/6 9.10%
Years of Schooling 11.40% 6.63% 1/6 16.65%
Standard
of Living
Electricity 3.27% 1.84% 1/21 1.32%
Drinking Water 7.32% 2.23% 1/21 1.60%
Sanitation 30.13% 9.25% 1/21 6.63%
Housing 41.37% 12.07% 1/21 8.65%
Cooking Fuel 43.90% 12.30% 1/21 8.82%
Assets 10.16% 4.72% 1/21 3.39%
Bank Account 3.69% 1.09% 1/21 0.78%
MPI (M0) = Sum of (CH × W) = 0.066
Contribution of indicators to India’s MPI score – NFHS-5 (2019-21)
Outlines which interventions would
lead to the maximum reduction of
the overall MPI of the population

54. Advantages

56. The Data Source
& Unit of Analysis
• National Family Health Survey
• Unit of Identification: Household
• Unit of analysis: Individual

57. National MPI
based on NFHS
Up to 0.054
0.055 to 0.107
0.108 to 0.159
0.160 to 0.211
0.212 and above
• 0.117
MPI score
(HxA)
• 25.01
%
Headcount
ratio (H)
• 47.13
%
Intensity of
poverty (A)
-4

58. National MPI
based on NFHS
Up to 0.054
0.055 to 0.107
0.108 to 0.159
0.160 to 0.211
0.212 and above
• 0.066
MPI score
(HxA)
• 14.96
%
Headcount
ratio (H)
• 44.39
%
Intensity of
poverty (A)
-5

59. District-wise MPI in Manipur
NFHS-4 NFHS-5
Up to 0.050
0.051 to 0.071
0.072 to 0.092
0.093 to 0.114
0.115 to 0.135
0.136 to 0.156
0.157 & above
MPI Headcount ratio Intensity
0.076 16.96% 44.61%
MPI Headcount ratio Intensity
0.034 8.10% 41.91%

60. India’s progress so far…

61. India’s progress so far…

62. India’s progress so far…

63. India’s progress so far…

64. India’s progress so far…

65. India’s progress so far…

66. India’s progress so far…

67. India’s progress so far…

68. Issues related to
calculation of MPI
in India
• Aggregation with uniform
weighting
• Data source issue
• Omission of relevant data
sources
• Missing dimension
• Intra-household differences

69. NITI Aayog’s way forward
• Reform Action Plan for the
States/UTs
• State Support Mission
• Progress Dashboard
• Technical Support to States

70. References
• NITI Aayog. National Multidimensional Poverty Index: A
progress review 2023. New Delhi (IN): NITI Aayog; 2023. 410p.
• UNDP Human Development Reports [Internet]. New York;
c2024. 2023 Global Multidimensional Poverty Index (MPI);
2023; [about 11 screens]. Available from:
https://hdr.undp.org/content/2023-global-multidimensional-
poverty-index-mpi#/indicies/MPI

71. • DMEO [Internet]. New Delhi: NITI Aayog; c2021. Global Indices
for Reforms and Growth; [last updated 2024 Mar 21]; [about 2
screens]. Available from: https://dmeo.gov.in/content/girg/
• Drishtiias [Internet]. New Delhi: Drishti The Vision Foundation,
India; c2018-2024. Multidimensional Poverty Index: Flaws and
Solutions; 2023 Dec 8; [about 12 screens]. Available from:
https://www.drishtiias.com/daily-updates/daily-news-
editorials/multidimensional-poverty-index-flaws-and-solutions

72. • Alkire S, Roche JM, Ballon P, Foster J, Santos ME, Seth S.
Multidimensional poverty measurement and analysis. Oxford
University Press, USA; 2015. 312p.
• NITI Aayog. National Multidimensional Poverty Index: A
baseline report. New Delhi (IN): NITI Aayog; 2021. 4218p.

73. Thank
you