Contrasting Monetary and Multidimensional Poverty Measures in a Low-Income Sub-Saharan African Country

Abstract

Despite significant progress in poverty measurement, few studies have undertaken an in-depth comparison of monetary and multidimensional measures in the context of low-income countries and fewer still in Sub-Saharan Africa. Yet the differences can be particularly consequential in these settings. We address this gap by applying a distinct analytical strategy to the case of Rwanda. Using data from two waves of the Rwandan Integrated Household Living Conditions Survey, we combine comparing poverty rates cross-sectionally and over time, examining the overlaps and differences in the two measures, investigating poverty rates within population sub-groups, and estimating several statistical models to assess the differences between the two measures in identifying poverty risk factors. We find that using a monetary measure alone does not capture high incidence of multidimensional poverty in both waves, that it is possible to be multidimensional poor without being monetary poor, and that using a monetary measure alone overlooks significant change in multidimensional poverty over time. The two measures also differ in which poverty risk factors they put emphasis on. Relying only on monetary measures in low-income sub-Saharan Africa can send inaccurate signals to policymakers regarding the optimal design of social policies as well as monitoring their effectiveness.