Multidimensional Poverty Reduction in India 1998/99 to 2005/06: Where and How?

Sabina Alkire and Suman Seth

The Development Studies Association Annual ConferenceInstitute of Education, London

3 November 2012

Motivation

Poverty measurement has been traditionally based on Per Capita Consumption Expenditure (PCE)

Non-poor by PCE does not necessarily imply non-deprived in other indicators, such as– Basic services like health, education, sanitation, clean

drinking water (Ahluwalia 2011)

– Nutrition (National Family Health Survey 2005/06; HUNGaMA Survey Report, 2011)

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Motivation

Reduction in income poverty did not necessarily translate into improvement in other social indicators

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PCE/Income poverty 1994-2005 45.3% to 37.2 % 0.74 % p.a.

Pop. with no education 1999-2006 36.3% to 33.7% 0.37 % p.a.

Women under-nutrition 1999-2006 35.3% to 32.3% 0.43 % p.a

Child under-nutrition 1999-2006 48.0% to 47.0% 0.15 % p.a.

Source: Tendulkar (2009) and National Family Health Survey (NFHS)

Motivation

Need for understanding the joint distribution of deprivations and distinguish those who are multiply deprived from those who are not

Need for a complementary measure that can capture direct deprivations

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Multidimensional Poverty Index (MPI)

The method is an adaptation of Alkire and Foster (2011) which can deal with the binary or categorical data and was introduced by Alkire and Santos (2010) and UNDP (2010)

A person is identified as poor using a counting approach in two steps

1) A person is identified as deprived or not in each dimension using a set of deprivation cutoff (z)

2) Based on the deprivation profile, a person is identified as poor or not

Terms: deprived and poor are not synonymous

How is MPI Computed?

The MPI uses the Adjusted Headcount Ratio:

H is the percent of people who are identified as poor, it shows the incidence of multidimensional poverty.

A is the average proportion of weighted deprivations people suffer at the same time. It shows the intensity of people’s poverty – the joint distribution of their deprivations.

A person is identified as poor if deprived in 1/3 of ten weighted indicators (k = 1/3)

.

Formula: MPI = H × A

Useful Properties

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The MPI can be broken down into the headcount ratio (H) and the average deprivation score (intensity) among the poor (A) to understand how poverty has been reduced over time

Population subgroup decomposition

Breakdown of overall poverty by dimensions to understand their contribution

Data for Analysis over Time

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We use two rounds of National Family Health Surveys for trend analysis

NFHS-2 conducted in 1998-99

NFHS-3 conducted in 2005-06

Not all ten MPI indicators are available in the NFHS-2 dataset

Indicators for Comparison over Time

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Indicators Deprivation cutoff1. Years of Schooling Deprived if no household member has completed five years of schooling2. Child School Attendance

Deprived if any school-aged child (6-14) in the household is not attending school up to class 8

3. Child Mortality Deprived if any child has died in the household (only among ever-married women)

4. NutritionDeprived if any ever-married adult woman or child under 36 months in the household with nutritional information is undernourished

5. Access to Electricity Deprived if the household has no electricity6. Access to Improved Sanitation

Deprived if the household´s sanitation facility is not improved or it is shared with other households

7. Access to Safe Drinking Water

Deprived if the household does not have access to safe drinking water or safe water is more than 30 minutes walk round trip

8. Housing and LandDeprived if the household lives in kaccha house or lives in semi-pucca house but owns less than one acre of unirrigated or less than 0.5 acre of irrigated land

9. Type of Cooking Fuel Deprived if the household cooks with dung, wood or charcoal

10. Asset Ownership Deprived if the household does not own more than one of: radio, TV, telephone, bike, motorbike or refrigerator, and does not own a car or truck

An Almost MPI for India (MPI-I)

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Based on the indicators and dimensions we create a poverty index similar to the global MPI

We refer it as MPI-I

It takes a lower value than the global MPI for India because of the changes in indicators.

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How Did Uncensored Deprivation in Indicators Change Over Time (raw)?

-16.0%

-12.0%

-8.0%

-4.0%

0.0%

Indicator (Statistical Significance) [1999 RH Ratio]

Significant reduction in all deprivations except attendance. Highest reductions in housing, sanitation, water and electricity deprivations.

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Change in MD Poverty Nationally for Different Poverty Cut-offs

Poverty Cutoff (k)   1999 2006 ChangeM0 0.364 0.319 -0.045*

Union (>0) H 92.9% 89.1% -3.8%*

A 39.2% 35.9% -3.4%*

  M0 0.341 0.292 -0.049*

One-fifth (0.2) H 73.4% 65.1% -8.3%*

A 46.5% 44.8% -1.6%

One-third (0.33)

M0 0.299 0.250 -0.049*

H 56.5% 48.3% -8.1%*

A 52.9% 51.7% -1.2%

Half (0.5)

M0 0.197 0.153 -0.045*

H 30.6% 23.6% -7.1%*

A 64.5% 64.7% 0.3%

How has Acute Poverty Decreased Nationally?

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-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

Abso

lute

Cha

nge

in C

H R

atio

Indicator (Statistical Significance) [Initial CH Ratio]

12.10%

1.80%

15.00%

16.50%

6.80%

11.50%

7.40%

12.20%

8.40%

8.30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Change in MPI-I

Assets

Cooking fuel

Housing

Water

Sanitation

Electricity

Nutrition

Mortality

Attendance

Schooling

Absolute Reduction in Acute Poverty Across Large States

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-0.110 -0.090 -0.070 -0.050 -0.030 -0.010

Andhra Pradesh (*) [0.296]Kerala (*) [0.14]Tamil Nadu (*) [0.194]Maharashtra (*) [0.23]Orissa (*) [0.38]Karnataka (*) [0.253]Gujarat (*) [0.246]West Bengal (*) [0.336]Jammu & Kashmir (*) [0.214]Eastern States (*) [0.319]Himachal Pradesh (*) [0.149]Uttar Pradesh (*) [0.344]Rajasthan (*) [0.34]Madhya Pradesh () [0.358]Haryana () [0.187]Punjab (*) [0.114]Bihar () [0.443]

Absolute Change (99-06) in MPI-I

Sta

tes

(Sig

nif

ica

nce

) [M

PI-I

in

19

99

]

We combined Bihar and Jharkhand, Madhya Pradesh and Chhattishgarh, and Uttar Pradesh and Uttarakhand

Significant reduction in all states except

Bihar, MP and Haryana.

Improvement in Poverty: H or A?

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Kerala

Tamil Nadu

Himachal Pradesh

Maharashtra

Andhra Pradesh

GujaratKarnataka

Jammu & Kashmir

Punjab

Orissa

Eastern States

Haryana

West Bengal

Rajasthan

Uttar Pradesh

Madhya Pradesh

Bihar

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

-70.0% -60.0% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0%

Per

cen

tage

Cah

nge

e in

In

ten

sity

of P

over

ty (A

)

Percentage Change in Headcount Ratio (H)

Performance consistently strongest in

Kerala, TN, & AP.

Comparison with Change in Income Poverty (p.a.)

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Acute Poverty Across Castes/Tribes

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M0-99 M0-06 Change H-99 H-06 Change A-99 A-06 ChangeScheduled Tribe 0.454 0.411 -0.043 79.7% 73.2% -6.5% 56.9% 56.1% -0.8%Scheduled Caste 0.378 0.308 -0.070 68.7% 58.3% -10.4% 55.0% 52.8% -2.2%OBCs 0.298 0.258 -0.040 57.4% 50.8% -6.5% 52.0% 50.7% -1.2%None Above 0.228 0.163 -0.065 45.0% 32.7% -12.3% 50.7% 49.8% -0.9%

Disparity Increases

MPI Poverty decreased least among the poorest. The STs (8.5% population share) are the poorest, but the change

is lowest for them and for OBCs, who have a higher pop share.

MPI Poverty decreased most for SC and ‘None’.

Distribution of Poor (k = 1/3) Across Castes

We see the % of ‘None’ decreased most, and that of SC, ST increased a bit and OBC increased quite a bit.

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Change in Population Share

STs12.6%

SCs22.2%

OBCs33.1%

General32.0%

1999

STs12.9%

SCs23.0%

OBCs42.3%

General21.8%

2006

Poverty for k = 50% Subset of poor for k = 1/3: each person’s intensity > 50%

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Deprivation Score

50%

Deprived

33%

No Deprivations

Poor by k = 1/3

MPI-I z Cutoffs

Poor by k = 1/2

k cutoffs

Poverty for k = 1/2 Across States

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1999 2006

RegionsHeadcount

Ratio (k = 1/3)Headcount

Ratio (k = 1/2)

Share of k = 1/2 Poor to k = 1/3

PoorHeadcount

Ratio (k = 1/3)Headcount

Ratio (k = 1/2)

Share of k = 1/2 Poor to k

= 1/3 PoorKerala 33.3% 8.6% 0.26 10.6% 1.8% 0.17Himachal Pradesh 35.3% 7.7% 0.22 23.3% 4.7% 0.20Tamil Nadu 42.3% 15.2% 0.36 26.8% 6.6% 0.25Maharashtra 46.4% 21.5% 0.46 32.1% 11.8% 0.37Jammu 43.8% 19.6% 0.45 33.7% 13.0% 0.39Haryana 39.7% 15.9% 0.40 33.9% 13.1% 0.39Punjab 24.7% 9.0% 0.37 19.0% 7.4% 0.39Andhra Pradesh 56.4% 31.7% 0.56 41.1% 16.4% 0.40Karnataka 50.3% 24.7% 0.49 38.1% 15.3% 0.40Gujarat 47.6% 26.2% 0.55 35.9% 16.0% 0.44Orissa 70.5% 39.4% 0.56 58.1% 30.3% 0.52Eastern States 61.1% 32.8% 0.54 51.1% 27.0% 0.53West Bengal 60.3% 35.2% 0.58 52.7% 27.8% 0.53Uttar Pradesh 64.3% 36.1% 0.56 58.9% 31.3% 0.53Rajasthan 63.5% 36.2% 0.57 58.1% 31.4% 0.54Madhya Pradesh 66.6% 38.5% 0.58 61.9% 34.0% 0.55Bihar 76.1% 49.5% 0.65 73.6% 48.4% 0.66India 56.5% 30.6% 0.54 48.3% 23.6% 0.49

Poverty for k = 1/2 Across other Subgroups

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1999 2006

Regions

HeadcountRatio (k =

1/3)Headcount

Ratio (k = 1/2)

Share of k = 1/2 Poor to k = 1/3

PoorHeadcount

Ratio (k = 1/3)Headcount

Ratio (k = 1/2)

Share of k = 1/2 Poor to k

= 1/3 PoorRural 68.0% 38.2% 0.56 60.2% 31.9% 0.53Urban 24.7% 9.9% 0.40 21.3% 8.3% 0.39Scheduled Tribe 68.7% 51.5% 0.75 58.3% 45.5% 0.78Scheduled Caste 79.7% 40.5% 0.51 73.2% 31.2% 0.43OBCs 57.4% 30.1% 0.52 50.8% 25.2% 0.49None Obove 45.0% 21.9% 0.49 32.7% 14.7% 0.45Hindu 57.5% 31.2% 0.54 48.4% 24.1% 0.50Muslim 59.1% 33.9% 0.57 54.8% 32.5% 0.59Christian 40.6% 17.4% 0.43 32.8% 14.8% 0.45Sikh 24.8% 8.2% 0.33 16.9% 5.7% 0.33Other Religion 43.4% 21.8% 0.50 42.2% 20.6% 0.49No Education 78.0% 50.4% 0.65 71.3% 43.2% 0.611-5 Years 60.7% 30.7% 0.51 50.4% 23.1% 0.466-10 Years 40.6% 14.9% 0.37 33.3% 11.5% 0.3511-12 Years 25.2% 8.0% 0.32 20.8% 6.5% 0.31More Than 12 Years 12.8% 3.3% 0.26 9.7% 2.0% 0.21India 56.5% 30.6% 0.54 48.3% 23.6% 0.49

Deprivation Score

Ultra Poor: Changing Both Deprivation and Poverty Cutoffs

50%

Deprived

33%

No Deprivations

Poor by k = 1/3MPI z Cutoffs

Ultra z Cutoffs

k cutoffs

Poor by k = 1/2

Ultra Poor

Ultra-poverty Deprivation CutoffsSubset of MPI poor that are most deprived in each dimension

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Indicator Acute Deprivation Cut-off ‘Ultra’ Cutoff

Nutrition Any adult or child in the household with nutritional information is

undernourished (2SD below z score or 18.5 kg/m2 BMI)3SD or 17 BMI

Child mortality Any child has died in the household

Years of schooling No household member has completed five years of schooling No SchoolingSchool attendance Any school-aged child is not attending school up to class 8

Electricity The household has no electricity

Sanitation The household´s sanitation facility is not improved or it is shared with

other householdsUses bush/field

Drinking waterThe household does not have access to safe drinking water or safe water

is more than 30 minutes walk round trip

Unprotected and 45 Minutes

House The house is kachha, or semi-pucca and owns <1 acre or < 0.5 irrigated kaccha & no land

Cooking fuel The household cooks with dung, wood or charcoal.Wood, grass, Crops, dung

AssetsThe household does not own more than one of: radio, TV, telephone, bike,

motorbike or refrigerator, and does not own a car or truckeven one

Deprivation in Ultra-Poverty Indicators(Raw Headcount Ratios)

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` MPI-I-99 Ultra-99 MPI-I-06 Ultra-06

Schooling 21.8% 10.5% 18.3% 9.5%

Attendance Unchanged 20.5% 20.5% 21.2% 21.2%

Mortality Unchanged 27.3% 27.3% 23.3% 23.3%

Nutrition 40.8% 20.4% 36.8% 17.9%

Electricity Unchanged 39.2% 39.2% 32.8% 32.8%

Sanitation 81.1% 70.3% 69.8% 56.7%

Water 23.2% 6.7% 15.8% 6.2%

Housing 49.5% 13.0% 35.2% 6.0%

Cooking Fuel 76.3% 73.7% 74.1% 71.7%

Assets 55.3% 28.7% 48.7% 20.7%

Total Change in Deprivations of Ultra Poor across time (raw)

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-14.0%

-10.0%

-6.0%

-2.0%

2.0%

Indicator [1999 RH Ratio]

Ultra & k = 1/3 is 37.9%

Deprivation Score

Ultra Poor in 1999

50%

Deprived

33%

No Deprivations

Poor by k = 1/3 is 56.4%MPI z Cutoffs

Ultra z Cutoffs

k cutoffs

Poor by k =1/2 is 30.6%Ultra & k = 1/2 is 15.8%

3.7%

22.1%

36.4%

Only 7.1% of the population did not have any deprivations at all

Ultra and k = 1/3 is 31.7%

Deprivation Score

Ultra Poor in 2006

50%

Deprived

33%

No Deprivations

Poor by k = 1/3 is 48.3%MPI z Cutoffs

Ultra z Cutoffs

k cutoffs

Poor by k =1/2 is 23.6%Ultra & k = 1/2 is 12.5%

5.5%

19.2%

40.8%

10.9%

Summary

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MPI-I 99 Ultra 99Poverty Cutoff

M0 H APoverty Cutoff

M0 H A

Union 0.364 92.9% 39.2% Union 0.260 87.5% 29.7%

20.0% 0.341 73.4% 46.5% 20.0% 0.223 55.8% 39.9%

33.3% 0.299 56.5% 52.9% 33.3% 0.178 37.9% 46.9%

50.0% 0.197 30.6% 64.5% 50.0% 0.095 15.8% 59.8%

MPI-I 06 Ultra 06Poverty Cutoff

M0 H APoverty Cutoff

M0 H A

Union 0.319 89.1% 35.9% Union 0.228 82.4% 27.6%20.0% 0.292 65.1% 44.8% 20.0% 0.188 48.5% 38.8%33.3% 0.250 48.3% 51.7% 33.3% 0.146 31.7% 46.0%50.0% 0.158 24.7% 64.1% 50.0% 0.074 12.5% 59.3%

Conclusion – i (of ii)

We have compared multidimensional poverty MPI-I across a seven year period, matching the global MPI indicators as closely as possible

Multidimensional poverty declined across India, with an 8% fall in the % of poor (or 1.17% p.a.).

But disparity among the poor has increased

Progress has been slowest for STs, for hh with uneducated head of household, for Bihar MP and Rajasthan, and for Muslims.

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Conclusion – ii

We also looked at two subsets of the MD poor: those with severe intensity (k = 1/2), and those with high depths of deprivations (ultra).

They are not the same: most ultra poor are not poor for k = 1/2.

Still 12.5 percent of the population experienced ultra poverty and also poverty for k= 1/2

We are unable to update these results: needed data are unavailable for India since 2005/6.

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