Remeasuring Poverty

Talking about the number of people living on or below a “dollar a day” is a simple, effective way of telling the story of progress (or the lack of it) in reducing global poverty. But focusing on income alone has obvious limitations as a measure of extreme poverty. These have been highlighted by the launch this month of a new index of “multidimensional poverty”, which takes into account specific deprivations such as inadequate education, sanitation and electricity as well as low income. There are ten different measures in all, and someone deficient in 70% of these is clearly worse off than someone lacking in 40%.

As well as providing greater detail about the different forms of extreme poverty in different parts of the world, the new measure, devised by the Oxford Poverty and Human Development Initiative and the United Nations Development Programme, shows that there are many more people living in extreme poverty than is suggested by the dollar a day measure (or, strictly speaking, $1.25 a day): 1.7 billion, rather than 1.3 billion.

The index will be incorporated into the UNDP’s annual Human Development Report, the 20th edition of which will be published in October, and should improve its already invaluable Human Development Index.

To see the difference the new measure makes, consider two African countries, Tanzania and Ethiopia. Using the income measure of poverty alone, Ethiopia looks much the less impoverished of the two – 39% of its population living in extreme poverty compared to 89% of Tanzanians. Use the multidimensional poverty measure, however, and the picture is reversed: around 65% of Tanzanians are in extreme poverty, compared with 90% of Ethiopians. Niger has the highest percentage of people in extreme multidimensional poverty, at 93%.

Despite these examples, and Africa’s generally impoverished image in the media, it accounts for ‘only’ 28% of the people in the world living in extreme multidimensional poverty. Over 51% live in South Asia. Despite India’s consistently strong economic growth, the 421m people living in extreme multidimensional poverty in eight of its states exceed the total number living similarly impoverished lives in the 26 poorest African countries combined.

These new numbers should add to the sense of urgency not only among India’s growing army of billionaires, at least some of whom are exploring how to be effective philanthrocapitalists, but also at the various international meetings scheduled for September to consider how to make greater progress towards achieving the Millennium Development Goals by 2015. The more subtle measurement of the details of poverty in different places should be of great help to philanthrocapitalists and others as they try better to target their efforts on the areas of greatest need.