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There is a better way of measuring poverty

26 August 2020

The Individual Measure of Multidimensional Poverty can provide policymakers the way to accurately measure poverty they so desperately need, Janet Hunt writes.

In his final report as UN Special Rapporteur on Extreme Poverty, Philip Alston launched a scathing attack on the use of the World Bank’s International Poverty Line (IPL) as a measure of poverty.

Calling it a “standard of miserable subsistence rather than an even minimally adequate standard of living”, Alston argues that while huge strides have been made in improving living standards globally, extreme poverty – which is what the IPL measures – is not being eliminated. He argued that even the World Bank is not expecting the world to meet Target 1 of the first Sustainable Development Goal, to ‘end poverty in all its forms everywhere’, despite using such a measly measure of achievement – the IPL.

Using the World Bank’s more realistic income poverty lines of $3.20 and $5.50 per day, the proportion of people living in poverty is huge, and worldwide range between 26 per cent and 46 per cent. The best multidimensional measure to date, the Multidimensional Poverty Index, based on data from 107 countries, calculates a rate of 22 per cent of people as multi-dimensionally poor in 2020. As Alston says, “The world is not even close to ending poverty”, and the impact of climate change and COVID-19 will only make the task harder.

Alston also recognises that as the IPL is a household measure it obscures within-household differences in poverty – which are now well recognised. This means gender and other differences are not visible using the IPL.

In response to this, Alston called for much more vigorous redistribution policies, including tax justice, far better social protection, and an important role for governments, rather than defaulting to the market, which is distributing wealth upwards, not to the poor. He also called for a better measure of poverty – one “explicitly tied to the satisfaction of basic needs and capabilities” that can reveal within household inequality, and unrepresented groups.

One measure that gets close to this is the Individual Measure of Multidimensional Poverty, previously known as the Individual Deprivation Measure (IDM).

The IMMP, intended as a national poverty measure, is based on 12 years research led by The Australian National University, most recently through the IDM Program, which was a partnership with the International Women’ Development Agency and the Australian Department of Foreign Affairs and Trade.

The IMMP measures 14 dimensions of poverty at the individual level. To be ‘least deprived’ on all 14 dimensions does not make anyone well off, but it suggests that their measurable and minimal needs are mostly met.

Importantly, the IMMP reveals different levels of poverty, overcoming another problem Alston’s report recognises, the focus on getting those almost at the IPL over the line – rather than attending to those way below it. It categorises dimension scores into four levels from ‘most deprived’ to ‘least deprived’, enabling the identification of individuals in extreme poverty.

A 2019 national study during the IDM Program in South Africa found that only 23 per cent of those surveyed scored 70 or higher on the IMMP Index Score, out of a possible 100.

More troubling was the finding that 17 per cent had a score at or below 40, and 37 per cent had a score at or below 50 – people with scores this low are extremely poor.

Another 42 per cent had scores between 50 and 70, indicating that they experienced deprivation across a number of dimensions.

The IMMP enables policymakers to identify the social groups who are experiencing the deepest poverty. Our results from South Africa revealed that women were more deprived than men: 19.6 per cent of women scored 40 or less on the Index compared to 13.9 per cent of men.

On top of this, 26 per cent of those with disability scored 40 or less, compared to 12 per cent without disability; and 19 per cent of rural and 16 per cent of urban people scored 40 or less. Younger age groups, like those 16 to 24 years scored better than older ones with 13 per cent scoring 40 or below, compared to 19 per cent of 25 to 64-year olds and 18 per cent of those 65 or older.

The IMMP provides more value to policymakers than the IPL by identifying those dimensions in which deprivation is greatest. Data from the South Africa IDM study revealed that in five dimensions – food, education, voice, time use and work – more than 10 per cent of respondents were categorised as ‘most deprived’ – that is, they were experiencing extreme deprivation in these dimensions. Indeed, 30.7 per cent of individuals were found to be severely food insecure, and categorised as most deprived.

The South Africa study reveals that the IMMP provides an extremely rich data set of considerable value to policymakers. It can identify those groups living in extreme poverty, pinpoint dimensional patterns of poverty, and enable targeted responses, helping governments and other actors address poverty across the globe

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Updated:  18 September 2020/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team