The Political Economy of Antipoverty Spending and Poverty Measurement

Governments around the world are changing the way they measure poverty, adopting multidimensional poverty measures that take into account deprivations in health, education, and other dimensions. This, in turn, can affect the incentives of government agents, their strategic interactions, and total antipoverty spending. Does adopting a multidimensional poverty measure lead to higher government spending on the poor? If so, why? And how does it affect resource allocations across government ministries? We answer these questions in a game-theoretic framework in which line ministers receive prestige by reducing poverty. Adopting a multidimensional index enables more ministers to directly influence measured poverty; however, improvements in the scalar index become a public good, engendering free riding on others' antipoverty spending. The multidimensional measure also creates a new set of policy levers, which policymakers can use to maximize government prestige or antipoverty spending; these two objectives generally conflict.