How to identify the poorest of the poor

The U.N. Millennium Development Goals (MDGs) — targets for eradicating extreme poverty and hunger, reducing child mortality, achieving universal education and reaching five other milestones in the realm of health, women’s empowerment and the environment — will hit their deadline in 2015. As countries and international organizations formulate a set of new goals to replace the MDGs, the question of what constitutes extreme poverty remains an important topic. Most of the discussion focuses on how poverty is measured. Does earning below $1.25 a day make someone the poorest of the poor? What if he earns $2 a day? How do we focus resources to ensure the poorest are not left behind?

The United Nations’ Open Working Group, which was established to steer the post-2015 agenda, has identified 19 areas deemed crucial for sustainable development. These include poverty eradication, food security and nutrition, health and population dynamics. These “limited in number, aspirational and easy to communicate” targets, as the group puts it, will be called the Sustainable Development Goals (SDGs). They are expected to integrate the achievements and pending targets of the MDGs while providing a framework for the coordination of development efforts among various stakeholders. Although the 19 focus areas are not ranked, poverty eradication invariably remains a primary challenge of international development efforts.

The big question is what constitutes poverty. As David Satterthwaite, a senior fellow at the International Institute for Environment and Development, recently noted, the current emphasis on monetary poverty — the $1.25 per day measure — does not fully capture the condition of poor people. The measurement of income poverty is essential, yes, but incomplete.

A new Oxford University study on multidimensional poverty, released June 16, shows that income measures alone do not capture deprivations in nonincome dimensions. The Oxford Poverty and Human Development Initiative’s Global Multidimensional Poverty Index (MPI) measures overlapping deficiencies in health, education and living standards. It is the only global index that analyzes both the incidence (the percentage of the population who are poor) and intensity (the share of overlapping deprivations each person faces at a given time) of poverty. The MPI identifies a person as poor if he or she is deprived in at least one-third of the 10 weighted indicators (click to see infographic).

The study shows that there are 1.6 billion multidimensionally poor people in 108 countries that are home to roughly 78 percent of humanity. The index analyzes poverty nationally and at times subnationally and includes countries without income data, such as Afghanistan, Somalia, East Timor and Uzbekistan. For example, two-thirds of the population in Afghanistan is multidimensionally poor, with education and nutrition deprivations driving their poverty figures. In countries where the $1.25 per day income measure and MPI poverty figures are available, results often diverge. For instance, in Ethiopia and Senegal, the percentage of MPI-poor people is more than twice as high as the number of people earning $1.25 per day. In contrast, in Madagascar, Zambia and Nigeria, multidimensional poverty rates are lower than income poverty rates.

The MPI identifies more people as poor than the $1.25 per day measure. This year’s index emphasizes a new subset of the MPI poor: the destitute, those suffering from an extreme form of multidimensional poverty. Destitute people have lost two or more children and may be forced to practice open defecation because they do not have access to proper sanitation. They live in families in which no member has completed more than a single year at school and some members are likely to be severely malnourished.

The most multidimensionally destitute people, 420 million, are in South Asia, with nearly 343 million in India alone. Niger, where more than two-thirds of the population is considered destitute, has the highest proportion of extreme poverty of any country. Analysis of the index underscores the extent of the suffering that poor households experience. For example, 67 percent of destitute families have at least one person with severe malnutrition at home, 41 percent have lost two or more children, and 90 percent have no sanitation facilities.

But the point is not simply to know these statistics. The point is to reduce them. As it turns out, policies aimed at reducing multidimensional poverty are working — and destitution especially is decreasing. Out of 34 countries for which data were available, Ethiopia had the largest reductions in destitution. From 2000 to 2011, its percentage of destitute people went down 30 points. The Horn of Africa nation of 92 million registered notable improvements in years of schooling among adults, children’s school attendance and sanitation. Niger, Ghana, Bolivia, Rwanda, Tanzania, Nepal, Haiti, Bangladesh and Zambia also showed laudable improvements for the poorest of the poor.

There is, however, a problem: Income poverty measures do not track destitution. Niger and Swaziland have comparable percentages of people living on less than $1.25 per day (44 percent and 41 percent, respectively), but 69 percent of Nigeriens are multidimensionally destitute, while only 8 percent of people in Swaziland are. In Niger, nearly half the population lives in households where adults lack a single year of education, and more than two-thirds lives without electricity. Swaziland, by contrast, does not suffer comparable distress.

The latest findings have important ramifications for an international goal of eradicating poverty, widely mooted as achievable by 2030. It would be but a faint success if efforts to curb income poverty around the world were not complemented by the eradication of multidimensional poverty. The deliberations on SDGs must look beyond the current standards and incorporate a multidimensional measure of poverty.

The 2014 MPI makes clear that income poverty is but one type of poverty that doesn’t capture the full complexity of the problem. Destitution and its grinding hardships remain a grim reality for hundreds of millions of people. If poverty is to be eliminated, both monetary and multidimensional poverty should be the focus of current and future development agendas.