An Analysis of Multidimensional Poverty: Evidence from Italy

It is widely agreed that poverty should be conceptualized as a multidimensional phenomenon, more related to the standard of living of the person or household than to the simple inability of satisfying basic subsistence needs. In this paper‚ we provide a more articulated picture of poverty in Italy by overlapping monetary and non-monetary measures of poverty. Application of Multiple Correspondence Analysis results in the identification of five dimensions of deprivation, namely “maintenance capacity‚” “consumption deprivation‚” “health deprivation‚” “housing environment‚” and “housing facilities.” Our results show that the use of multidimensional poverty indicators improves the poverty analysis as compared to a traditional income-based approach. Further, while maintenance capacity is highly correlated with income, other dimensions of deprivation, such as health, housing environment, and housing facilities, are found to be unrelated to income. To deeply analyze the relationship between income and deprivation, a cluster analysis (K-means) is carried out to group households on the basis of a standardized income variable and deprivation scores of the first dimension. Seven clusters are identified. Our findings highlight that, on the one hand, for about 46% of Italian households, income information is not explanatory and descriptive of their deprivation status. On the other hand, some households are poor in terms of income but are not deprived in terms of maintenance capacity.