The Age Of MPI And SDGs
Development is the ultimate destination of developing countries as articulated in their national plans and policies. More development means less poverty. To reduce poverty, the first and foremost task is to measure it. The traditional income-consumption-based measure of poverty has been by far the most dominant approach in development discourse. This approach is considered to be grounded in sound theory subsistence living and methodology of household survey and data analysis.
Widely referred to as the money-metric measure of poverty, this conventional measure of poverty is one-dimensional, meaning that it boils down the human welfare as deficit in income or consumption. For Nepal, about Rs. 53 per person per day is calculated as the cut-off income to be counted as poor. Catchy though, this measure of poverty has been questioned, especially in terms of its inability to count other dimensions of human sufferings or incapabilities, also reflected in the Sustainable Development Goals (SDGs).
With the profoundest contribution of noble prize winning economic and development philosopher AmratyaSen, the notional of development (and thereby poverty) was conceptualised as enlarging peoples’ capabilities and choices. The very essence of this idea is that even the money-rich people can be capability-poor, suggesting that the old-style income measure of poverty is not sufficient of articulate human deficiencies. Capability has many dimensions, but for the measurement of poverty three broad dimensions have been operationalised. They are health, education and standard of living.
Within these three dimensions, 10 indicators have been identified. These indicators are two within the health dimension (nutrition and child mortality), two within the education dimension (years of schooling and school attendance) and the remaining six indicators within living standard (cooking fuel, improved sanitation, improved sanitation, improved drinking water, electricity, flooring and roofing, and asset ownership). By providing equal weights to these three dimensions, a composite indicator, known as the Multidimensional Poverty Index (MPI), is calibrated out of these 10 indicators. With data, MPI poverty level can be obtained utilising this methodology.
In partnership with the Oxford University’s Oxford Poverty and Human Development Initiative (OPHI), National Planning Commission (NPC) has recently published the MPI-based poverty level for Nepal. Relying on the 2014 Multiple Indicator Cluster Survey (MICS) data, 28.6 per cent people are found to be multi-dimensionally poor in the country. It should be noted here that the income poverty in the country is just 21.6 per cent. What is interesting is the fact that poverty measured utilising in either of these two approaches declining in Nepal over the years. The report also reveals the provincially disaggregated data which shows Province 2 and 6 the most poverty-stricken provinces although marked differences are found in terms of the dimensions of poverty in each of these provinces.
MPI is certainly an improvement over the existing money-metric measurement of poverty. In terms of the poverty headcount, for a developing country like Nepal, MPI tends to be higher than the income poverty headcount. For Nepal, it is higher by seven percentage points – 21.6 versus 28.6. The new measure of poverty provides us a choice in conceptualising poverty and human sufferings; we have now two lenses to look at poverty – uni-dimensional versus multi-dimensional. From a normative point of view, it is always good to measure poverty differently. This facilitates the policy-makers to be more sensitive to the very crucial development issue of poverty. It has been said that lighting fire in different places overcomes darkness. This may be the reason why the vice-chair of the NPC Dr.SwarnimWagle calls it a “path-breaking decision” to use MPI by the government of Nepal.
What is even more important is the choice of anti-poverty policies based on these two measures of poverty. While the income measure of poverty might suggest for more grown-enhancing policies, the MPI may argue for redistribution within a household or within a country. As the report shows Province 2 needs focused interventions on health whereas for province 7 it is the inadequacy of assets that make people there poor. It is said that anti-poverty policies are designed based on how poverty is measured. With the availability of disaggregated poverty data based on the new measure of poverty, the upcoming provincial governments will be able to formulate focused poverty interventions towards improving the specific dimension of poverty.
It is also imperative to establish a relationship between MPI and Sustainable Development Goals (SDGs). SDG is a global development framework with its 17 goals to be realised by 2030. In a way, these 17 goals are 17 dimensions of development, meaning that SDGs recognises the multi-dimensionality of development. These goals are all encompassing and supported by a host of indicators still evolving for better monitoring and evaluation. MPI captures most of the very essence of these 17 SDGs. As the SDG conceptualises development in a multidimensional way so does the MPI for poverty. Therefore, any improvement in any of the 10 indicators of MPI will help realise the SDGs. For instance, overcoming nutritional deficiency is directly related with improved health and educational outcomes. Sabina Alkire, the dedicated proponent of MPI measure of poverty has noted that MPI is aligned with SDGs. One thing that MPI does not consider but SDGs firmly considers is inequality.
To conclude, dimensions of human well-being are multiple. As articulated in our ongoing 14th plan and other sectoral policies, illuminating all these dimensions is development. SDG has identified 17 such dimensions, ranging from income poverty reduction, enhancing education, health to environment to equality to inclusion and sustainability. Based on Sen’s capability approach to development, MPI is an innovation in the measurement of poverty which attempts to capture the very essence of the developmental aspirations as articulated in the SDGs. MPI not only enables us to conceptualise and measure poverty in an alternative way, it also provides us an empirical basis for designing specific poverty interventions at the national and sub-national levels.
Knowledge is always in the making; it evolves. MPI has improved our understanding about poverty and has made it more humane. However, both the income and MPI are absolute poverty measures. With the increased complexity of our society and economy, relative poverty (closely related with inequality) has sometime become more painful than absolute poverty. As we live in the age of MPI and SDGs, let us hope that the evolution of MPI will take into account the relative poverty or inequality.