Category Archives: OPHI Working Papers

Endogenous Weights and Multidimensional Poverty: A Cautionary Tale

Composite measures such as multidimensional poverty indices depend crucially on the weights assigned to the different dimensions and their indicators. A recent strand of the literature uses endogenous weights, determined by the data at hand, to compute poverty scores. Notwithstanding their merits, we demonstrate both analytically and empirically how a broad class of endogenous weights violates key properties of multidimensional poverty indices such as monotonicity and subgroup consistency. Without these properties, anti-poverty policy targeting and assessments are bound to be seriously compromised. Using real-life data from Ecuador and Uganda, we show that these violations are widespread. Hence, one should be extremely careful when using endogenous weights in measuring poverty. Our results naturally extend to other welfare measures based on binary indicators, such as the widely studied asset indices.

Citation: Dutta, I., Nogales, R. and Yalonetzky, G. (2021): ‘Endogenous weights and multidimensional poverty: A cautionary tale’, OPHI Working Paper 135, Oxford Poverty and Human Development Initiative (OPHI), University of Oxford.

Income Mobility in a Changing Macroeconomic Environment

The analysis of income mobility is often constrained to short-term periods of survey panel data. This paper provides long-term income mobility trends through a continuum of short- term synthetic panels in Mexico. The examined period of analysis (1989–2018) is characterized by the lack of panel data and by a changing macroeconomic environment. The analysis builds on cross-sectional survey data using the methodology developed in Bourguignon and Moreno (2020) and employs several income mobility indicators from three complementary conceptions used in the literature: positional mobility, directional movement, and mobility as an equalizer of longer-term incomes. This research documents low levels of economic mobility over the course of three decades, except for the periods of rebound economic growth following the two deepest economic crises in modern times: one internal, in 1995, and one external – in 2009. These movements, however, seem to be only transitory deviations as income mobility indicators soon returned to their characteristic levels.

Citation: Moreno, H. (2020): ‘Income mobility in a changing macroeconomic environment’, OPHI Working Paper 134, Oxford Poverty and Human Development Initiative, University of Oxford.

Monetary and Multidimensional Poverty: Correlations, Mismatches and Joint Distributions

We consider the relationships between multidimensional and monetary poverty indices in international and national poverty profiles, and evaluate the empirical consequences of identifying poor people relying on a combination of both approaches. Taking first a cross-country perspective, focusing on the developing world, we find that the incidence of poverty accord- ing to money metrics and the global MPI, a non-monetary measure of poverty, are correlated. This correlation breaks down in poorer countries. We use micro-data from six countries to study the joint densities of monetary and multidimensional welfare and the poverty identification mismatches for a comprehensive array of poverty line pairs. Mismatches are important, particularly, again, in the poorer countries. Although mismatches could be solved by combining both approaches in a dual cutoff poverty measure, the choice of the monetary poverty line remains a considerable issue as it changes the non-monetary composition of poverty.

Citation: Evans, M. Nogales, R. and Robson, M. (2020). ‘Monetary and multidimensional poverty: Correlations, mismatches, and joint distributions’, OPHI Working Paper 133, University of Oxford.

Evaluation of Anti-poverty Programs’ Impact on Joint Disadvantages: Insights from the Philippine Experience

Anti-poverty programs increasingly target disadvantages in multiple outcomes to address cur- rent and future poverty. Conventional evaluation exercises, however, mostly estimate pro- grams’ impacts separately. We present a framework, drawing from the counting approach, that captures the joint distribution of disadvantages and allows the evaluation of programs’ impacts on multiple disadvantages. We apply the framework to scrutinise the Philippine conditional cash transfer program using an embedded randomised control trial survey. Examining the program’s impact on the distribution of multiple disadvantages, we observe that the program successfully reduced multiple disadvantages overall, but did not necessarily benefit the families experiencing a higher number of disadvantages simultaneously. Our results exemplify the valuable contribution of considering the joint distribution of disadvantages in evaluating anti-poverty programs’ impacts.

Citation: Seth, S. and Tutor, M. J. (2019): ‘Evaluation of anti-poverty programs’ impact on joint disadvantages: Insights from the Philippine experience’ OPHI Working Paper 132, University of Oxford.

Work and Wellbeing: A Conceptual Proposal

Labour is of utmost importance for human wellbeing. Yet a comprehensive framework that can reflect the empirical diversity of labour activities along with each activities’ manifold effects on human wellbeing is still lacking. An additional challenge for any such framework is to adequately handle fundamental moral ambiguities, which are inherent to many forms of work. This paper argues that a conceptualisation of labour within the capability approach can meet these requirements. Specifically, I argue that labour can be conceived as a characteristic-providing activity, where obtained characteristics are then transformed into functioning achievements, while accounting for both individual and societal heterogeneity. Additionally, paying adequate attention to unfreedoms experienced by agents turns out to be vital for a comprehensive account. Finally, the paper discusses policy handles, offers suggestions for particular applications, and identifies several other benefits for labour economics.

Citation: Suppa, N. (2019). ‘Work and wellbeing: A conceptual proposal.’ OPHI Working Paper 131, University of Oxford.

Impact of the SADA-Northern Ghana Millennium Village Project on Multidimensional Poverty: A Comparison of Dashboard and Index Approaches

This paper assesses the impact of the SADA-Northern Ghana Millennium Village Project (MVP) on multidimensional poverty using dashboard and index approaches. Using a unique, large dataset that spans five years and contains data on multiple welfare indicators, we estimate the impact of MVP on the Millennium Development Goals (MDGs) and on the global multidimensional poverty index (global MPI). We find that the project had a limited impact on the MDGs and yet a positive impact on the global MPI. We assess the robustness of the impact of MVP on the global MPI, and we conclude that it was largely driven by the sensitivity of the index to changes in a few MDG indicators. We conclude that the MVP had a limited impact on welfare and that the global MPI should be used with caution in the evaluation of development programmes.

Citation: Masset, E. and García Hombrados, J. (2019): ‘Impact of the SADA-Northern Ghana Millennium Village Project on multidimensional poverty: A comparison of dash-board and index approaches’. OPHI Working Paper 130, University of Oxford.

The Welfare Effects of India’s Rural Employment Guarantee

We examine the welfare effects of India’s workfare program NREGA using a novel, almost sharp regression discontinuity design. We find large seasonal consumption increases in states implementing the program intensely, which are a multiple of the direct income gains. We also find increases in adolescents’ school attendance. Our results imply substantial general equilibrium effects. We conclude that, when properly implemented, the public employment program holds significant potential for reducing poverty and insuring households against various adverse implications of seasonal income shortfalls.

Citation: Klonner, S. and Oldiges, C. (2019). ‘The welfare effects of India’s Rural Employment Guarantee’, OPHI Working Paper 129, University of Oxford.

Diverging Identification of the Poor: A Non-random Process. Chile 1992–2017

This paper investigates the degree of association in the identification of the poor between the standard monetary FGT measure and the Alkire-Foster Multidimensional Poverty Index. For this purpose, we use a measure of redundancy between the two poverty measures (R0). In Chile, over the past 25 years, R0 has declined at a rate of 1.5% per year. The decline is unimportant during the 1990s, a decade of rapid economic growth, while it is notable thereafter, in a period characterized by modest economic growth and the progressive introduction and deepening of social policies. The conditional correlation between socioeco­nomic and demographic characteristics with R0 is examined at the province and household levels. After controlling for household non-eligibility across some of the indicators of the Multidimensional Poverty Index, we find that the divergence in the identification of the poor can be explained by improve­ments in education, increasing urbanization, and a reduction in the household size. Consequently, the divergent identification of the poor seems to be a real process, which is not randomly distributed across the population. On the basis of our results, we hypothesize that this divergence is a general phenomenon that tends to occur in countries undergoing demographic transition, urbanization, and progress in educa­tion. If so, and given the fact that poverty alleviation strategies are adopted partly on the basis of poverty statistics, the diverging identification of the poor might have distributive consequences for the poor themselves.

Citation: Klasen, S. and Villalobos, C. (2019). ‘Diverging identification of the poor: A non-random process. Chile 1992–2017’, OPHI Working Paper 128, University of Oxford.

The State of Multidimensional Child Poverty in South Asia: A Contextual and Gendered View

Many poverty measures identify a household as poor or non-poor based on the achievements of all its members. Using the household as the unit of identification has the benefit of enabling a poverty measure to draw on information about persons of different ages and genders, and in different life situations. However, it also loses individual information because this is summarized at the level of the household.  For example, the underlying microdata contain additional information on individual children. As a consequence, gendered and intrahousehold inequalities, for instance, are not evident even when data for them exist. This paper proposes methods to augment a household multidimensional poverty index (MPI) by applying individual-level analyses to the same dataset, and analysing these alongside the matrix of deprivations underlying an MPI. In particular we scrutinise (i) what proportion of deprived children live in multidimensionally poor households; (ii) what proportion of deprived children are girls or boys; and (iii) what proportion of deprived children live in households in which other children are not deprived in that same indicator. We also observe (iv) what other deprivations deprived and poor children experience in addition to the focal deprivation. Finally, we study what proportion of people live in households where children of different ages experience two different child deprivations concurrently. More complex analyses can also be undertaken that combine information on the deprivation status of more than one eligible member, and we illustrate this to identify pioneer children, who completed six years of schooling although adults in their household have not. Overall, this study provides a prototype methodology that can be mainstreamed into subsequent national and global MPI analyses in order to shine a light on child poverty multidimensionally. We illustrate the methodology with analyses of the global MPI for seven countries in South Asia.

Citation: Alkire, S., Ul Haq, R. and Alim, A. (2019). ‘The state of multidimensional child poverty in South Asia: a contextual and gendered view’, OPHI Working Paper 127, University of Oxford.

The Role of Inequality in Poverty Measurement

The adjusted headcount ratio, or MPI, is widely used by countries and international organizations to track multidimensional poverty and coordinate policy. Several characteristics have encouraged its rapid diffusion: applicability to ordinal data, ease of communication, a practical identification of the poor based on multiple deprivations, and a dimensional breakdown that informs and coordinates policy. Sen (1976) and others have argued that poverty should also be sensitive to inequality among the poor. This paper provides a new axiom that embodies this perspective in the multidimensional context and defines an M-gamma family containing a range of measures satisfying the axiom. Like the FGT or P-alpha class of monetary measures, it has three main members: the headcount ratio to evaluate the prevalence of poverty, the adjusted headcount ratio to account for its intensity, and the “squared count” measure that reflects severity and inequality among the poor. We note that any inequality sensitive measure must violate the dimensional breakdown axiom and investigate Shapley decomposition methods as an alternative. Unfortunately, these methods can yield counterintuitive result; however, the squared count measure avoids this critique and its Shapley breakdown reduces to an easy to compute formula that supplements the traditional breakdown for the MPI with information relevant to inequality among the poor. An example from Cameroon illustrates our method of using M-gamma measures in tandem to evaluate multidimen­sional poverty while accounting for inequality and dimensional contributions.

Citation: Alkire, S. and Foster, J. (2019). ‘The role of inequality in poverty measurement’, OPHI Working Paper 126, University of Oxford.