Comparing Monetary and Multidimensional Poverty in Germany

This paper compares Germany's official income-based poverty measure with a multidimensional poverty index based on the Alkire-Foster method. For their comparative assessment, I employ the capability approach as a conceptual framework. I find both measures agree on certain aspects, such as socio-demographic risk factors. However, I also document a substantial mismatch in who is deemed poor, which seems to originate from inherent, conceptual features of the measures. More generally, the results also suggest additional individual income reduces multidimensional poverty, if only at a decreasing rate. Examining regional variations, I find that the measures do not agree about trends in poverty and that there is no clear-cut link between aggregate income and multidimensional poverty. I conclude that, despite some basic agreement, the choice of poverty measure makes a difference, with properly designed multidimensional poverty indices having the advantage of better reflecting human well-being.