Saud Bangash UNDP Pakistan 02 June 2010

Structure of Presentation
Setting the context for measuring multi-dimensional

poverty in Pakistan. The tools

Indices of Multiple Deprivation Poverty Scorecard

The gaps and challenges Discussion

Pakistan - What drives the need for Multi-dimensional Poverty Measurement?

A progressive improvement (consistent temporal rounds) in

reporting district level socio economic data using household sample surveys has led to an interest in exploring avenues for analyzing multidimensionality of poverty and informing public policy. (a case from Punjab province) steep rise in food, energy and fuel costs, has pushed the government towards using a uni-dimensional (composite) poverty measure using basic needs based capabilities and functionings for targeting beneficiaries of a cash transfer programme as a counter-cyclical intervention. (the case of Benazir Income Support Programme (BISP) poverty scorecard)

An increase in income poverty and its severity caused by the

Key Considerations for Poverty Measurement

Quantifiable (nominal, binary, cardinal, ordinal,

categorical). Captures dimensions and evolutions. Establishes causality for capability poor. Minimize Type I and II errors for targeting. (choice of indicators/ union vs. intersection) Direct versus indirect approaches. (Sampling vs. Counting) Setting poverty cut-offs/thresholds. Inter-temporal and cross-sectional comparability.

Indices of Multiple Deprivation (IMD) for Punjab

Indices developed based on sectors of deprivation.

(aligned to the Multi-indicator Cluster Survey MICS) 23 indicators representing economic, social and housing concerns included. Factor Analysis (FA) technique used to cluster covariant independent variables and to assign weights by degree of variance/dispersion. Overall Score assigned to household and Cluster Analysis used to categorize into poor and non-poor (This step not done in the Punjab exercise).

Possible Scope of Dimensions

Income
Employment Health and disability Education Skills and training Barriers to housing and services Living Environment Crime

Example of an Indicator

Calculating the IMD

IMD ED HL HQ WS EC = Index of Multiple Deprivations = Index of Education Deprivation = Index of Health Deprivation = Index of Deprivation in Housing Quality = Index of Water and Sanitation = Index of Economic Deprivation =3

IMD Findings - Example

Estimated Indices of Multiple Deprivations [Dummy dataset] [Percentage of population deprived in terms of selected indicators] Overall Punjab 30.00 Education 40.00 Health 50.00 Housing 60.00 WS 70.00 Economic 80.00 Central 28.00 38.00 48.00 58.00 68.00 78.00

Northern
Southern Western

29.00
30.00 31.00

39.00
40.00 41.00

49.00
50.00 51.00

59.00
60.00 61.00

69.00
70.00 71.00

79.00
80.00 81.00

For analysis similar tabulations are possible: by district inter temporal by different regional groupings by additional dimensions with quality indicators e.g. Quality of Governance

IMD Findings - Example

Poverty Scoring
Indirect approach which is simple, quick and

inexpensive viz. a sample based direct approach. Verifiable indicators are chosen with strong correlation to poverty and can be replaced over time. Poverty scoring can estimate:
The poverty likelihood Poverty rate of a group of households

Change in poverty rate for a given group of households

Testing for Methodology Robustness

Inclusion (share correctly predicted as poor HHs) Under-coverage (share incorrectly predicted to be

above the poverty line) Leakage (share incorrectly predicted to be below the poverty line) Exclusion (share correctly predicted to be above the poverty line)

Likelihood Estimates

Gaps & Challenges

Mostly dimensions used are assets oriented. Quality of

life indicators are difficult to measure. Assumption of household consumption expenditure per adult equivalent as the basic welfare measure (dependant variable), still in use. Limitations around indicator selection and questionnaire design lead to under-coverage and leakages of beneficiaries.

Gaps & Challenges

Factor Analysis techniques typically designed for

treating continuous data with a normal distribution. Application to ordinal and discrete data could be problematic. Constructing a single score assumes substitutability across dimensions. This obscures the nature of deprivation faced by a HH. Assigning cardinal scores to categorical/ordinal data is technically problematic.

Conclusion
In order to create an accurate measure for estimating

multidimensional poverty, techniques need to be adopted which allow capturing the qualitative aspects of living standards usually captured by ordinal data.
Alkire and Foster (2007) have proposed one such

methodology.

Multidimensional Poverty definitional diversity

Three conceptions of poverty revolve around subsistence; basic needs; and relative deprivation. Different approaches see poverty as:
a human condition that reflect failures in many dimensions of human life; they all add up to an assault on human dignity. capabilities that are connected with the freedom people have in the choice of life they lead, which is their functioning. (Sen, A) present when basic capability failure arises because a person has inadequate command over resources. (Kakwani, N) a social exclusion phenomenon which analyses the structural characteristics of society and the situation of marginalized groups.