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Brief history of the measurement of multidimensional poverty in Latin America

Maria Emma Santos

David Alvarez Veloso

María Emma Santos describes the region’s experience in measuring multidimensional poverty, which dates back forty years. Currently, seven of the eleven countries (or cities) with a national and official Multidimensional Poverty Index are in Latin America. This article is based on the second part of the OPHI working paper “Measuring Multidimensional Poverty in Latin America:” Previous Experience and the Way Forward

Poverty is one area where measurement is so key because it guides funds allocation within poverty reduction policies, affects political accountability in the area, and, most importantly, it affects the success in reaching the poor and improving their lives.

The release of the Multidimensional Poverty Index (MPI), an internationally comparable index to measure acute poverty in the developing world fostered debate on how poverty should be measured. Such debate reinforced an already increasing interest within the Latin America region in the design of national multidimensional poverty indices.

Latin America has a long tradition in multidimensional poverty measurement within the Basic Needs Approach. Back in the 1970s, household surveys were uncommon in the region and thus measuring monetary poverty in a systematic and regular way was not possible. In this context, the Basic Needs Approach (BNA) served as a framework to choose some key indicators that were available through the census and to allow monitoring poverty.

The method was first implemented in Chile in 1975, constructing a map of extreme poverty, but it gained prominence after the seminal study called “Poverty in Argentina, Unsatisfied Basic Needs Indicators data from the national census of Population and Housing 1980” conducted by the Institute of Statistics and Census of Argentina (INDEC in Spanish) and the Economic Commission for Latin America and the Caribbean (ECLAC) in the early eighties. The study stated three principles that would guide the selection of indicators:

  • That the indicators represented the degree of failure to satisfy some specific group of basic needs
  • That these indicators were significantly associated with [income] poverty.
  • That these indicators were comparable across regions of the country so that poverty maps could be constructed.

A fourth implicit principle was that the indicator needed to be available in the census data. In practice, the second and fourth principles dominated the process. Within the project, ECLAC conducted an empirical study using data from a survey in Argentina, which had both information on income and indicators contained in the census data. The recommended indicators to be used were those that had been shown to be good (strong) predictors of income poverty (both absolute and relative poverty lines were considered). In other words, while the study formally recognized poverty as a multidimensional problem, the underlying poverty concept used was that of insufficient income.

The set of indicators of Unsatisfied Basic Needs (UBN) chosen by INDEC and ECLAC were:

  • Households with more than three people per room (overcrowding)
  • Households with precarious housing
  • Households with no kind of toilet
  • Households with children of school age (6–12 years old) not attending school
  • Households with four or more people per working member (high dependency ratio) and whose household head’s education is at most second grade of primary education. (Indicator of Economic Capacity, taken as a surrogate for income).

Very similar sets of indicators were used to measure UBN poverty by the statistical institutes in most Latin American countries. UBN indicators typically belonged to four broad dimensions:

  • Access to minimum housing standards
  • Access to basic services that guarantee minimum sanitary conditions
  • Access to basic education
  • Economic capacity to achieve minimum consumption levels.

The UBN method to measure poverty uses what is called a counting approach to identify the poor. Such identification approach entails counting the number of dimensions in which people suffer deprivation.

“What we measure affects what we do; and if our measurements are flawed, decisions may be distorted”

Sen, Stiglitz, Fitoussi

In Latin America, equal weights were used for each indicator, even though some of them can be linked to the same dimension – predominantly housing and education. The UBN poor are those who experience at least one deprivation. However, information on UBN has been typically presented with a range of statistics, including the proportion of households and people experiencing each unsatisfied basic need and different combinations of them.

In terms of the aggregation measure used in the UBN approach, this has been the headcount ratio, with its well-known limitations, namely being insensitive to the depth deprivations, as well as being insensitive to the breadth of poverty. Taking advantage of the disaggregated level of information provided by census data, the methodology was used to construct detailed poverty maps, which became a valuable tool for policy.

 

The Integrated Method and the ‘Improved’ Integrated Method

As household surveys started to be regularly implemented in Latin American countries, the measurement of poverty with the income method also became widely implemented following the methodology outlined by Altimir (1979) Then, a natural interest in crossing the UBN method with the income method emerged, as this was now possible using household surveys (which contained the UBN indicators plus information on income). With this motivation, Beccaria and Minujin (1985) and Katzman (1989) proposed the “Integrated Method” to measure poverty which identified four sets of people: (1) chronically poor: the income and UBN poor; (2): structural poverty: the UBN poor but income non-poor; (3) recently poor: the income poor but UBN non-poor and (4) socially integrated: not poor by any method.

Empirical evidence from the integrated method showed that the income method and the UBN method were complementary, identifying different slices of the population and that clearly the correspondence between the two groups was far from perfect (Boltvinik 1991).

However, Boltvinik noted that the complementarity between the two methods was just a coincidence, essentially a consequence of the sequencing in which poverty measurement had been implemented. He highlighted that combining the two methods had some conceptual redundancies, such as including the indicator of “economic capacity” in the UBN method (unnecessary given that the income poor were identified). He then proposed an “Improved Integrated Method to Measure Poverty”, which involved changes in each method separately, as well as in their combination. This method was applied in Mexico, but it was not implemented on a broader scale.

 

Recent multidimensional measurements

There are two countries in the region that have were pioneers in developed developing official multidimensional poverty measures. One is Mexico, which launched its measurement in 2009[1]; the other one is Colombia, which launched its measure in 2011.[2] Each country has undergone different processes to construct their measures in such a way that they enjoy acceptance and consensus.

Mexico’s measure was motivated by the approval of the General Law of Social Development (LGDS in Spanish) in January 2004. The law was the outcome of a long process of debate and reflection in which voices from political, social and intellectual spheres participated. The independent Council for the Evaluation of Social Policy (CONEVAL), created in 2006 as a consequence of this law, designed the multidimensional measure.

In the case of Colombia, poverty reduction was set as a national priority in the National Development Plan. The government commissioned the Department of National Planning (DNP) to design the measure to monitor such a goal. Based on the methodology Alkire-Foster, the DNP designed a measure composed of 15 indicators belonging to five dimensions: educational conditions of the household, childhood and youth, work, health, and housing and public services. Since 2012, this multidimensional measure has been used to define the regions for the allocation of the conditional cash transfer program “Más Familias en Acción”. The measure is also used to monitor regional policies and to define goals on specific interventions.

In 2011, El Salvador started process of designing a national multidimensional poverty measure in order to monitor poverty trends and guide social policy. The technical and advisory board created for that purposed revised the experience in the country and in the world and have conducted focus groups with people living in poverty. They have identified eight dimensions: employment, housing, education, security, recreation, health, nutrition and income. El Salvador launched its MPI in 2015.

Since 2012, the state of Minas Gerais in Brazil is also implementing a multidimensional poverty measure in 132 of its municipalities (using the Alkire-Foster methodology) to target is poverty reduction program called “Travessia”.

We can see that Latin America has been developing multidimensional poverty measures since the seventies. Forty years that have made the region a pioneer in implementing this kind of measures. Nowadays, eight out of the twelve countries with a Multidimensional Poverty Index are in the region.

 

 

[1] Editor´s note: Mexico presented its measure at the end of 2009, but it was made official through publication in the official bulletin in 2010.
[2] Editor´s note: By 2015, three other countries in the region introduced official Multidimensional Poverty Indexes (MPI): Chile, El Salvador and Costa Rica. Ecuador and Honduras officially launched its MPI in 2016. There are currently six countries in Latin America that are in different stages of the design of their national measures.
Latin America MPI Multidimensional Measures