(Re)Counting the poor in Peru: a multidimensional approach

After an impressive 12 point reduction in Peruvian monetary poverty, questions have been raised about the extent in which these figures mask deprivation in several other aspects critical for human development. We propose using the Alkire-Foster multidimensional headcount to address this issue, and devise a simple comparison framework to measure the tension between the incidence of monetary poverty and the overall level of deprivation based on the multidimensional measure. We select six dimensions and their respective indicators for the Peruvian case, and apply this framework using data for 2004 and 2008. Results indicate that we now face a larger risk of classifying as non-poor individuals who still endure significant deprivation if we rely on the conventional monetary dimension. In addition, inter and intraregional comparisons show that deprivations endured by the multidimensional poor are similar across regions and concentrated on the health and dwelling conditions dimensions, in particular, on the lack of adequate water and sanitation services. This last result reveals an opportunity to focalize public investment efforts.