Multidimensional Poverty Index

The Multidimensional Poverty Index (MPI) was developed in 2010 by Oxford Poverty & Human Development Initiative and the United Nations Development Programme.

History
The MPI was created for the 20th Anniversary edition of the UNDP Human Development Report and uses different factors to determine poverty beyond income-based lists. It uses a range of deprivations that afflict an individual's life. "The measure assesses the nature and intensity of poverty at the individual level in education, health outcomes, and standard of living."

The MPI is an index of acute multidimensional poverty. It reflects deprivations in very rudimentary services and core human functioning for people across 104 countries. Although deeply constrained by data limitations, MPI reveals a different pattern of poverty than income poverty, as it illuminates a different set of deprivations. The MPI has three dimensions: health, education, and standard of living. These are measured using ten indicators. Poor households are identified and an aggregate measure constructed using the methodology proposed by Alkire and Foster. Each dimension and each indicator within a dimension is equally weighted.

Calculation
The MPI is calculated as follows:

$$MPI = H \times A$$

H: Percentage of people who are MPI poor (incidence of poverty) A: Average intensity of MPI poverty across the poor (%)

Indicators used
The following ten indicators are used to calculated the MPI:

 Years of Schooling: deprived if no household member has completed five years of schooling Child Enrolment: deprived if any school-aged child is not attending school in years 1 to 8 
 * Education (each indicator is weighted equally at 1/6)

 Child mortality: deprived if any child has died in the family Nutrition: deprived if any adult or child for whom there is nutritional information is malnourished 
 * Health (each indicator is weighted equally at 1/6)

 Electricity: deprived if the household has no electricity Sanitation: deprived if they do not have an improved toilet or if their toilet is shared (MDG Definition) Drinking water: deprived if the household does not have access to clean drinking water or clean water is more than 30 minutes walk from home (MDG Definition) Floor: deprived if the household has dirt, sand or dung floor Cooking fuel: deprived if they cook with wood, charcoal or dung Assets: deprived if the household does not own more than one of: radio, TV, telephone, bike, or motorbike 
 * Standard of Living (each indicator is weighted equally at 1/18)

A person is considered poor if they are deprived in at least 30% of the weighted indicators. The intensity of poverty denotes the proportion of indicators in which they are deprived.

Real example
Niger:


 * MPI = 0.642
 * H = 0.927
 * A = 0.693

In Niger, 92.7% of the country's population is MPI poor (they are deprived in at least 30% of the weighted indicators, by definition). Those who are MPI poor suffer from deprivation in 69.3% of indicators, on average.

Fictional example
Country X consists of persons A, B and C. The following table shows the deprivation on each of the 10 indicators for persons A, B and C.

"0%" indicates no deprivation in that indicator, while "100%" indicates deprivation in that indicator.

Factor H for country X is:

$$\frac {1 + 1 + 0}{3} = 0.667$$

Factor A for country X is:

$$\frac {33.33% + 50.00%} {2} = 0.417$$

Thus, the MPI for country X is:

$$0.667 \times 0.417 = 0.278$$

MPI in some developing countries
Source: Alkire, Sabina and Maria Emma Santos. 2010. Multidimensional Poverty Index: 2010 Data. Oxford Poverty and Human Development Initiative. Available at: www.ophi.org.uk/policy/multidimensional-poverty-index/.