An approach to determine multi-dimensional poverty index for Sri Lanka: a comparative study

Abstract

Poverty consists of two types: monetary poverty and multi-dimensional poverty. Monetary poverty is measured by determining whether income of a person falls below the poverty line while multidimensional poverty is measured using a method where it measures whether a person satisfies a set of specified basic needs. In 2010, the Oxford Poverty and Human Development Initiative (OPHI) in collaboration with the United Nation’s Development Program’s Human Development Report Office developed the Global Multidimensional Poverty Index (MPI) to measure multidimensional poverty under certain assumptions. Applying the Equal Weighting System by taking unit as the household, to compute MPI is one of the important assumptions which needs to be improved. The aim of this study is to propose an unequal weighting system taking unit as the individual to address the research problem of applying the equal weighting system taking the unit as the household. This study makes a significant contribution by offering a comprehensive exploration of the multidimensional poverty situation in Sri Lanka, both at the national level and within individual districts. The methodology applied in obtaining MPI is the Alkire -Foster Methodology based on Counting Approach. In the context of the Sri Lankan socio-cultural background, a more accurate national MPI was obtained by selecting indicators together with an unequal weighting structure. The Household Income and Expenditure survey – 2016 data were obtained from the Department of Census and Statistics, Sri Lanka for the analysis. This study reveals variations in the weighting system across dimensions and indicators, challenging the equal weighting approach adopted by the OPHI. Furthermore, it highlights that 68.7% of the population aged 10 or above in Sri Lanka experience multidimensional poverty. This would enable policy makers to have more accurate national and regional MPIs to implement efficient poverty reduction strategies covering all the districts in the country.