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Poverty Severity in a Multidimensional Framework: The Issue of Inequality between Dimensions

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  • Nicole Rippin

    (German Development Institute (DIE))

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    Abstract

    This paper contributes to the axiomatic foundation of multidimensional poverty measures. A well-known problem in the multidimensional framework is that the identification method used in the one-dimensional framework, the union method, leads to exaggerated poverty rates. So far, this problem has been addressed by either changing the identification method itself or by introducing different weighting schemes – which all have in common that they assume attributes to be substitutes. In our paper we claim that the exaggeration problem is first of all an issue of how distribution sensitivity is accounted for and thus ought to be addressed at the aggregation instead of the identification level. In fact, we provide evidence that the way in which the Transfer principle, which accounts for distribution sensitivity in the one-dimensional framework, has been extended to the multidimensional framework is incomplete. We demonstrate that by solving this aggregation problem with the introduction of an additional axiom, the exaggeration problem at the identification level is, as a direct consequence, automatically solved as well. Finally, we derive a family of poverty measures whose specific, axiomatically implied weighting structure solves the exaggeration problem for ordinal as well as cardinal data while at the same time allowing for an independent relationship between attributes. We demonstrate that some of the most well-known poverty measures like the Multidimensional Poverty Index are special cases of this family.

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    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_47.pdf
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    Bibliographic Info

    Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 47.

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    Date of creation: 22 Nov 2010
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    Handle: RePEc:got:gotcrc:047

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    Related research

    Keywords: Multidimensional poverty measurement; axiomatic approach; aggregation of poor; poverty severity;

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    Cited by:
    1. Sabina Alkire and James Foster, 2011. "Understandings and Misunderstandings of Multidimensional Poverty Measurement," OPHI Working Papers ophiwp043, Queen Elizabeth House, University of Oxford.
    2. Channing Arndt & Roberta Distante & M. Azhar Hussain & Lars Peter Østerdal & Pham Lan Huong & Maimuna Ibraimo, 2011. "Ordinal Welfare Comparisons with Multiple Discrete Indicators: A First Order Dominance Approach and Application to Child Poverty," Discussion Papers 11-13, University of Copenhagen. Department of Economics.
    3. Jacques Silber, 2011. "A comment on the MPI index," Journal of Economic Inequality, Springer, vol. 9(3), pages 479-481, September.

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