Economic Development Indices Questions Medium
The Multidimensional Poverty Index (MPI) is calculated by considering multiple dimensions of poverty, including health, education, and standard of living. The calculation involves three main steps:
1. Identification of Deprivations: The first step is to identify the deprivations that individuals or households face in each dimension. This is done by using specific indicators that capture the lack of access to basic necessities. For example, in the health dimension, indicators such as child mortality and nutrition may be used.
2. Weighting and Aggregation: Once the deprivations are identified, weights are assigned to each dimension and indicator based on their relative importance. These weights reflect societal preferences and can vary across countries or regions. The deprivations are then aggregated using these weights to calculate the overall MPI score for an individual or household.
3. Determination of Poverty Status: The final step involves setting a poverty threshold or cutoff point. Individuals or households whose MPI score falls below this threshold are considered multidimensionally poor. The poverty headcount ratio is then calculated as the percentage of the population living below this threshold.
Overall, the MPI provides a comprehensive measure of poverty that goes beyond income-based measures, taking into account various dimensions of well-being. It helps policymakers and researchers understand the different aspects of poverty and design targeted interventions to alleviate it.