Human Development: Definitions, Critiques, and Related Concepts

The purpose of this background paper is i) to synthesize the discussions regarding the concept of human development, so as to inform the 2010 Report’s definition, and ii) drawing on the extensive policy and academic literatures, to propose relationships between the concept of human development and four related concepts: the Millennium Development Goals, Human Rights, Human Security, and Happiness. Inequality, the duration of outcomes across time, and environmental sustainability are also prominent due to their fundamental importance.

Choosing Dimensions: The Capability Approach and Multidimensional Poverty

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Multidimensional Poverty and its Discontents

More data on non-income dimensions of poverty are available than at any previous time in history. Alongside this, multidimensional measurement methodologies have advanced considerably in the past fifteen years. These advances together have created new possibilities to measure multidimensional poverty at the local, national and international level. Yet the fact that overall measures can be constructed does not mean that they will necessarily add value. This paper focuses on the question of when, how and why certain multidimensional poverty measures add value, sketches the limits of the contribution, and introduces a set of standing questions. The key value-added of a rigorously implemented multidimensional poverty index is that it conveys additional information not captured in single-dimensional measures (or in a dashboard) on the joint distribution of disadvantage and the composition of poverty. It also provides a consistent account of the overall change in multidimensional poverty across time and space. The paper discusses the joint distribution approach to multidimensional poverty measurement and presents one class of poverty measures within this approach. It then introduces one recently implemented measure within this family: the 104-country Multidimensional Poverty Index 2010 and uses concrete examples to explain its construction further. For example, without weights one can only identify the multidimensionally poor by the union or the intersection approaches; by these approaches the 2010 MPI would have identified an average of 58% or 0% of people across the 104 countries as poor. It also shows how to ‘unfold’ the MPI by sub-group or dimension, and also by intensity – because similar ‘intensities’ of poverty can conceal different distributions of intensity among the poor. Pointing out the added value of multidimensional poverty indexes is not to suggest that single-dimensional measures be abandoned but rather supplemented. Investing further in multidimensional measures has the potential to generate significant advances in understanding and useful policy tools.

Individual Motivation, its Nature, Determinants and Consequences for Within Group Behavior

The paper deals with evaluating the adequacy of the assumption that in economic transactions people are self-interested insofar as they are motivated solely by the concern of maximizing their own utility, and in particular with assessing how this assumption affects within-group behavior. Policy and incentive structures based on the assumption of exogenous and self-interested motivation can undermine other sources of motivation and have negative effects both on cooperative behavior and also on economic efficiency. The paper sketches the motivational assumption of homo œconomicus: in the classical formulation, in rational choice theory and in Becker’s later work which introduces personal and social capital into the individual utility function. It then challenges the position that homo œconomicus contains an adequate characterization of human motivation for cooperative within-group behavior. It introduces alternative motivational behaviors: philia and altruism, identity and self-expression, moral rules, intrinsic motivation and social norms. It argues that motivations are complex and multiple; a single assumption of utility maximization is insufficient for policy purposes. As the individual is always a social being, how she behaves will be dependent on the social context in which she is acting. If motivations are endogenous, and if under certain conditions maximizing motivation displaces other sources of motivation, then these indirect effects, and their long term consequences for efficiency and equity, should be taken into account in framing economic policies.Motivation; Rational Choice; Self-Interest; Cooperation

Acute Multidimensional Poverty: A New Index for Developing Countries

This paper presents a new Multidimensional Poverty Index (MPI) for 104 developing countries. It is the first time multidimensional poverty is estimated using micro datasets (household surveys) for such a large number of countries which cover about 78 percent of the world´s population. The MPI has the mathematical structure of one of the Alkire and Foster poverty multidimensional measures and it is composed of ten indicators corresponding to same three dimensions as the Human Development Index: Education, Health and Standard of Living. Our results indicate that 1,700 million people in the world live in acute poverty, a figure that is between the $1.25/day and$2/day poverty rates. Yet it is no $1.5/day measure. The MPI captures direct failures in functionings that Amartya Sen argues should form the focal space for describing and reducing poverty. It constitutes a tool with an extraordinary potential to target the poorest, track the Millennium Development Goals, and design policies that directly address the interlocking deprivations poor people experience. This paper presents the methodology and components in the MPI, describes main results, and shares basic robustness tests.Poverty Measurement, Multidimensional Poverty, Capability Approach, Multidimensional Welfare, Human Development, HDI, HPI

Acute Multidimensional Poverty: A New Index for Developing Countries

This paper presents a new Multidimensional Poverty Index (MPI) for 104 developing countries. It is the first time multidimensional poverty is estimated using micro datasets (household surveys) for such a large number of countries which cover about 78 percent of the world's population. The MPI has the mathematical structure of one of the Alkire and Foster poverty multidimensional measures and it is composed of ten indicators corresponding to same three dimensions as the Human Development Index: Education, Health and Standard of Living. The MPI captures a set of direct deprivations that batter a person at the same time. This tool could be used to target the poorest, track the Millennium Development Goals, and design policies that directly address the interlocking deprivations poor people experience. This paper presents the methodology and components in the MPI, describes main results, and shares basic robustness tests. --Poverty Measurement,Multidimensional Poverty,Capability Approach,Multidimensional Welfare,Human Development,HDI,HPI

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.

Winning Ideas: Lessons from Free-market Economics

For economic ideas to take root and change history, a number of ingredients need to be present, ranging from individual agents to policy implementation. This paper identifies certain strategic levers that underlay the success of free market economists in promoting their approach in academia, society, and government. How did these economists move from a marginalized position where they could not publish or receive tenure and where their students were not hired at other leading universities, to a position of dominance? In particular, it examines the impact of F.A. Hayek, and of such institutions as the Mont Pelerin Society, the Institute for Economic Affairs (IEA) in Britain, and the funding arrangements. The paper draws on the wealth of secondary literature regarding the spread of free market economic ideas, particularly in the US, Latin America, and the UK, to identify five strategic activities and methods of transmission that were central to their advance, and will be relevant to others.

Designing the Inequality-Adjusted Human Development Index (HDI)

This paper proposes a method for adjusting the HDI to reflect the distribution of human development achievements across the population, and across dimensions, using an inequality measure from the Atkinson family. We begin with a discussion of the proposed indices in an idealized setting where variables and their scales have been identified and the data are available. We then address the practical issues that arise when applying these methods to real data. The final section presents and evaluates another related approach.

Where Did Identification Go?

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.