Using an Ordinal Approach to Multidimensional Poverty Analysis

Abstract

It is a common assertion that poverty is a multidimensional phenomenon, yet most empirical work on poverty uses a one-dimensional yardstick, usually household expenditures or income per capita or per adult equivalent, to judge a person’s well-being. When studies use more than one indicator of well-being, poverty comparisons are either made for each indicator independently of the others,³ or are performed using an arbitrarily defined aggregation of the multiple indicators into a single index .⁴ In either case, aggregation across multiple welfare indicators, and across the welfare statuses of individuals or households, requires specific aggregation rules that are necessarily arbitrary.⁵ Multidimensional poverty comparisons also require estimation of multidimensional poverty lines, a procedure that is problematic even in a unidimensional setting.

This research is supported by the SAGA project, funded by USAID cooperative agreement #HFM-A-00-01-00132-00 with Cornell and Clark-Atlanta Universities, and by the Poverty and Economic Policy (PEP) network of the IDRC. For more information, see http://www.saga.cornell.edu and http://www.pep-net.org.

This contribution includes substantial sections of Duclos, Sahn, and Younger (2006b). We are grateful to the World Bank Economic Review and to Oxford University Press for granting us permission to reproduce them here and to Jacques Silber for his encouragement and comments.