Multi-Dimensional Progress:
Breaking-down Policy Silos in Middle Income Countries
George Gray Molina
Eduardo Ortiz-Juarez
UNDP, Regional Bureau for Latin America and the Caribbean
Context (1)
A new development agenda
A global debate to adopt a new multi-dimensional framework for poverty
reduction as part of a post-2015 development strategy.
Arguments:
• Multi-dimensional indicators are valuable inputs for better policy
coordination, targeting, and monitoring.
• Social policy is more effective and efficient if it customizes its programs to
address the different ways of being poor across different populations.
Context (2)
Area of opportunity for the Caribbean
While there is significant progress in Colombia, Mexico, Chile and the
Caribbean OECS countries, there is an opportunity to address multidimensional poverty reduction in the rest of the region as we approach 2015.
LAC will embark on a new round of readjustment to global goals and means
of implementation.
The best measurements are those that can be disaggregated and
applied in ways that fit the needs of our countries.
High-threshold, nation-specific indices of multidimensional progress
1.
In RBLAC we are working on designing nation-specific multidimensional indices calibrated at development thresholds appropriate to
the needs of the working poor, vulnerable groups and emerging middle
classes.
2.
We have now an informative, methodologically robust MPI as the basis
for comparability.
3.
The MPI has been successful as the multi-dimensional counterpart of the
$1.25 poverty line.
4.
However, very rudimentary goods and services (as well as the $1.25
standard) are becoming less relevant for a growing number of countries
whose welfare thresholds are significantly higher.
Relativity of the dimensional cut-offs
What are we looking for?
In partnership with OPHI, we are seeking for a context-specific index
as guidance for policy in middle-income countries.
What does it mean to be poor?
“one might consider whether one should
construct a relative MPI cut-off that rises
with average well-being in a country”
(Dotter & Klasen 2013; pp. 8).
“Rising average living standards in many
developing countries have triggered a
reassessment of what it means to be
considered poor” (Ravallion 2012; pp. 40).
Counterpart of the $2.5/$4 a day poverty lines…
Should the multi-dimensional measurement be restricted to the
MPI in regions with different levels of development?
$4 a day
$5 a day
Central and Eastern
Europe and the CIS
12 millions
0.7%
$1.25 a day
Sub-Saharan Africa
458 millions
27.6%
And, accordingly, with
different monetary
poverty lines?
Latin America and
Caribbean
51 millions
(3.1%)
East Asia and the
Pacific
255 millions
15.4%
South Asia
844 millions
50.9%
Arab States
39 millions
2.3%
$2 a day
Which dimensions are
relevant in each
region? Which are
relevant across
countries in the same
region?
An example of higher thresholds relative to LAC
Dimension
Indicator
Material well-being
Education
Dwelling
Brazil
Dimensional cut-offs
Asset index
Having a car
Child in school
All children between 7 and 15 attending school
Education of the head
At least five years of education
Running water
Having tap water in the dwelling
Sanitation
Having flush toilet in the dwelling
Quality of living space
House with non-precarious materials
Nicaragua
Uruguay
70.0
60.0
Meaningful for policy
purposes (LAC-specific)
50.0
40.0
What about other
countries?
30.0
20.0
10.0
0.0
Incidence
Breadth
MPI
Original MPI (cut-off = 1/3)
Incidence
Breadth
MPI
Region-specific MPI (cut-off = 1/3)
Source: HDR 2011, and own calculations. All three indicators are expressed in %.
Also, counterpart of the vulnerability and middle
class thresholds (i.e. the non-income poor)
Also, counterpart of the vulnerability and middle
class thresholds
Nonpoor
Poor
What is the multi-dimensional threshold/profile of those
stratified under a monetary approach?
Distribution of groups in Mexico, 2012
Mill.
Groups
Percent
People
Ultra-poverty (< $1.25)
4.4
3.7
27.6 mill.
Extreme ($1.25 - 2.5)
9.1
7.8
(23.5%)
Moderate ($2.5 - 4)
14.1
12.0
Vulnerable ($4 - 10)
48.3
41.2
89.7 mill.
Middle-class ($10 - $50)
38.9
33.1
(76.5%)
Upper-class (> $50)
2.6
2.2
Total
117.3
100
Nation-specific index
A.1 Selection of indicators/dimensions.
Two potential approaches:
a. “People tend to value…” through (expensive, non-systematic)
cross-country opinion polls and participatory exercises.
b. “People have/have no…” appropriate to their needs and the local
context (i.e. needs might be very different in Grenada and
Uruguay, even if the same set of potential indicators is available
for the same group; for instance the vulnerable).
We follow the latter approach using factorial/principal component
analysis to identify those needs of the poor, the vulnerable, and the
middle class in Mexico.
Nation-specific index
A.2 Selection of indicators/dimensions among the poor.
The needs of the poor in Mexico, 2012
Ultra-poverty
Extreme poor
Moderate poor
(< $1.25)
($1.25 - 2.5)
($2.50 - 4)
Assets
Radio
Sewing machine
Fan
Bicycle
Washing machine
DVD or BluRay
Microwave / Oven
Motorcycle
Dwelling and related services
Some source of water
Electricity
Some source of water
Water tank
Room for cooking
Drainage
Flooring
Some source of water
Water tank
Wall materials
Private toilet
Labor income
Non-contributory pensions
Self-employment
Access to food
Market and state forces
Non-contributory pensions
Health services
Source: Gray Molina & Ortiz-Juarez (in progress), based on ENIGH 2012
Nation-specific index
A.3 Selection of indicators/dimensions among the non-poor.
The needs of the non-poor in Mexico, 2012
Vulnerable ($4.0 - 10) Middle-class ($10.0 - 50) Upper-class (> $50)
Assets
Bicycle
Tape recorder
Washing machine
TV
Pickup truck
Showerhead
Car
Stereo
Printer
Heating / A.C.
Roaster
Homeownership
Car
Stereo
PlayStation, Xbox
Computer
DVD or BluRay
Dwelling and related services
Room for cooking
Overcrowding
Flooring
Roofing material
Running water
Drainage
Gas tank
Market and state forces
Health services
Social security
Retirement fund
Social security
Disability insurance
Labor income
Rental income
Source: Gray Molina & Ortiz-Juarez (in progress), based on ENIGH 2012
Nation-specific index
B. Measurement and aggregation
In progress for Chile, Dominican Republic and Mexico.
The results depend on particular place at particular time; therefore, they are not
comparable. Instead, they would change in parallel with nation-specific economic
growth, redistributive policies, technological change, and consumption patterns in
order to inform policy makers.
In this example, we use a dual cut-off in the spirit of Alkire-Foster:
1.
2.
Deprived or not, in each indicator
Deprived in k or more indicators to be identified as (multi-dimensionally) poor,
vulnerable, and middle class.
(We are working on weighting and a third cut-off intended to separate mutually
exclusive groups; i.e. the multi-dimensionally vulnerable would not include the
multi-dimensionally poor as their needs differ).
The case of the multi-dimensionally ‘ultra-poor’
The principal components
analysis yielded 7 indicators
for the ultra-poor.
Ultra-poverty (< $1.25)
Assets
Radio
Sewing machine
Fan
Dwelling and related services
Some source of water
Electricity
Market and state forces
Using the threshold of 1/3 proposed by Alkire
and Santos (2010), one individual would be
identified as multi-dimensionally ultra-poor if
he/she is deprived in more than 2 out of 7
indicators.
The results are shown below:
Groups
Ultra-poor (< $1.25)
Ultra-poor (PCA)
MPI mid-2000s
Non-contributory pensions
Health services
Source: Gray Molina & Ortiz-Juarez (in progress), based on ENIGH 2012
Mill.
Percent
People
4,369,338
3.7%
3,241,537
2.8%
4,540,005
4.1%
Overall
• We are working on provide a toolkit to diagnose and monitor
good practice in attaining multi-dimensional progress at local
and national government levels in the region.
• Informative for regional governments, and useful for resources
targeting.