Multidimensional poverty measurement with individual prefenres

TitleMultidimensional poverty measurement with individual prefenres
Publication TypeWorking Paper
AuthorsDecancq, K., Fleurbaey M., & Maniquet F.
PublisherHerman Deleeck Centre for Social Policy
Place PublishedAntwerpen
Year of Publication2019
NumberWP 19/05
Date Published02/19

We propose a new approach to multidimensional poverty measurement. To aggregate and weight the different dimensions of poverty, we rely on the preferences of the concerned indi- viduals rather than on an arbitrary weighting scheme selected by the analyst. We provide an axiomatic characterization of an approach in which multidimensional poverty measures add up individual indices of poverty based on their multidimensional outcomes and their prefer- ences. We discuss two families of these individual indices of poverty: quantity metrics and money metrics. Members of the first family evaluate individual poverty by the fraction of the poverty line vector to which the individual is indifferent. The second family considers the ratio between the income to which the individual is indifferent, for some fixed price vec- tor, and the money value of the poverty line vector. We illustrate our approach with Russian survey data between 1995 and 2005. We find that, compared to standard poverty indices, our preference-sensitive indices lead to considerable differences in the identification of the poor.

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