Multidimensional Indices of Achievements and Poverty: What Do We Gain and What Do We

Poverty and wellbeing are multi-dimensional. Nobody questions that deprivations and achievements go beyond income. There is, however, sharp disagreement on whether the various dimensions of poverty and wellbeing can be aggregated into a single, multi-dimensional index in a meaningful way. Is aggregating dimensions of poverty and wellbeing useful? Is it sensible? Here I summarize and contrast three key papers that respond these questions in strikingly different ways. The papers are: The HDI 2010: New Controversies, Old Critiques by Jeni Klugman, Francisco Rodríguez and Hyung-Jin Choi; Understandings and Misunderstandings of Multidimensional Poverty Measurement by Sabina Alkire and James Foster; and, On Multidimensional Indices of Poverty by Martin Ravallion.poverty measurement, multidimensional poverty, deprivation, axioms, Human Development Index, capabilities, substitutability, trade-offs, welfare, country classifications

Multidimensional indices of achievements and poverty: What do we gain and what do we lose?

Poverty and wellbeing are multi-dimensional. Nobody questions that deprivations and achievements go beyond income. There is, however, sharp disagreement on whether the various dimensions of poverty and wellbeing can be aggregated into a single, multi-dimensional index in a meaningful way. Is aggregating dimensions of poverty and wellbeing useful? Is it sensible? Here I summarize and contrast three key papers that respond these questions in strikingly different ways. The papers are: The HDI 2010: New Controversies, Old Critiques by Jeni Klugman, Francisco Rodríguez and Hyung-Jin Choi; Understandings and Misunderstandings of Multidimensional Poverty Measurement by Sabina Alkire and James Foster; and, On Multidimensional Indices of Poverty by Martin Ravallion.poverty measurement, multidimensional poverty, deprivation, axioms, Human Development Index, capabilities, substitutability, trade-offs, welfare, country classifications

A PLS PATH MODEL TO INVESTIGATE THE RELATIONS BETWEEN INSTITUTIONS AND HUMAN DEVELOPMENT

The paper studies the relations between types of institutions on different components of human development. A role of aggregate demand in determining the material components of human development is assumed. We thus divide institutions into those that create demand and those that are determined by the whole process of development. Similarly we divide human development in its three traditional components (economic development, health, knowledge). Both human development and institutions are assumed as multidimensional constructs; all the main components of these constructs are defined as latent variables, and the relations between them as structural relations. A Partial Least Squares (PLS) path model is developed: it is the aggregation (and simultaneous estimation) of an outer model relating observed or manifest variables to their own latent variable and of a structural model (inner model) relating some endogenous latent variable to other latent variables. From the goodness of fit point of view, our results seem to validate our theoretical assumptions.Structural Equations Models, Institutions, Human Development

Understandings and Misunderstandings of Multidimensional Poverty Measurement

Multidimensional measures provide an alternative lens through which poverty may be viewed and understood. In recent work we have attempted to offer a practical approach to identifying the poor and measuring aggregate poverty (Alkire and Foster 2011). As this is quite a departure from traditional unidimensional and multidimensional poverty measurement – particularly with respect to the identification step – further elaboration may be warranted. In this paper we elucidate the strengths, limitations, and misunderstandings of multidimensional poverty measurement in order to clarify the debate and catalyse further research. We begin with general definitions of unidimensional and multidimensional methodologies for measuring poverty. We provide an intuitive description of our measurement approach, including a ‘dual cutoff’ identification step that views poverty as the state of being multiply deprived, and an aggregation step based on the traditional Foster Greer and Thorbecke (FGT) measures. We briefly discuss five characteristics of our methodology that are easily overlooked or mistaken and conclude with some brief remarks on the way forward.

The axiomatic properties of an entropy based index of segregation

This paper reviews the properties suggested in the methodological literature on the measurement of occupational gender segregation. It is found that an index of (relative) segregation based on the entropy concept, IE, satisfies thirteen basic axioms previously proposed in the single-dimensional case, and can be expressed as the sum of a between-group and a within-group term both for any partition of the set of occupations and in the two-dimensional case

Indicators of Inequality and Poverty

This essay aims at a broad, main-stream account of the literature on inequality and poverty measurement in the space of income and, additionally, deals with measures of disparity and deprivation in the more expanded domain of capabilities and functionings. In addition to an introductory and a concluding part, the paper has four sections. The first of these, on measurement of income inequality, deals with preliminary concepts and definitions; a visual representation of inequality (the Lorenz curve); real-valued indices of inequality; properties of inequality indices; some specific inequality measures; and the relationship between Lorenz, welfare, and inequality orderings. The second section, on poverty, deals with the identification and aggregation exercises; properties of poverty indices; some specific poverty measures; the problem of plurality and unambiguous rankings; poverty measures and anti-poverty policy; and other issues in the measurement of poverty. The third section considers aspects of both congruence and conflict in the relationship amongst poverty, inequality, and welfare. The final substantive section advances the rationale for a more comprehensive assessment of human wellbeing than is afforded by the income perspective, it briefly reviews measurement concerns relating to generalized indices of deprivation and disparity, and it discusses the data and policy implications of the more expansive view of well-being adopted in the section.inequality, disparity, poverty, deprivation, measurement, income, capability, functioning, well-being

Empirical Applications of Multidimensional Inequality Analysis

This paper explores the empirical application of theoretical multidimensional inequality analysis using real household welfare distributions. The paper operationalises recent conceptual developments in multidimensional inequality theory and assesses their usefulness for measurement and policy analysis. Despite the existence of a thriving theoretical literature on multidimensional inequality, empirical applications, particularly at the individual and household levels, are few and far between. This paper compares and contrasts different methodologies for the analysis of multidimensional welfare, including multidimensional inequality indices and stochastic dominance techniques. The results strongly highlight the importance of bringing non-monetary aspects of household welfare into the forefront of inequality analysis since measurements based solely on the distribution of income variables may misrepresent the degree of overall inequality in society. Agreement over the various approaches to the measurement of multidimensional inequality entails, however, non-trivial decisions that may limit the practical usefulness of these measures. We suggest that the use of multidimensional inequality ranges and restrictive dominance criteria may open significant scope for further developments in the empirical analysis of multidimensional inequality.Multidimensional inequality; inequality indices; income inequality; education inequality; health inequality; stochastic dominance

Polarization, inequality and growth: The Indian experience

We analyze polarization in India roughly in the past two and half decades using consumption expenditure data. We show that both bipolarization and multidimensional polarization (on several dimensions: caste, rural-urban, state, region) have increased since the 1990s. In the case of bipolarization, this is a reversal from the earlier trend (in the 1980s). Overall, our results suggest that the high growth that India has been witnessing since the 1990s has been associated with widening disparities. Comparing polarization and inequality, we find similarities, but also some differences. Our results therefore underscore the importance of studying polarization as distinct from traditional inequality.Polarization; Inequality; Growth in India.