Estimating vulnerability to income and multidimensional poverty: a new methodological approach

Abstract

Purpose The purpose of this paper is to propose a new vulnerability to income and multidimensional poverty estimation index (VIMPI). This index is designed to measure the likelihood of individuals falling into and remaining in poverty. Design/methodology/approach The paper introduces a new methodology that integrates the concepts of the well-being gap, individual and indicator-specific weighting, and vulnerability. This approach is simple to apply and accurately measures vulnerability with less susceptibility to measurement error and outliers. The index satisfies all poverty and vulnerability axioms, including transferability and monotonicity. The newly proposed method has been applied to Namibian and Ghanaian data and compared with similar techniques. Findings The results showed that Ghana's vulnerability to income and multidimensional poverty was 37.9% and 56%, respectively. Of the 37.9% of vulnerable individuals, 23.4% were at risk of falling into poverty, while 14.57% were at risk of remaining in poverty. These findings demonstrate the effectiveness of VIMPI in accurately estimating vulnerability to poverty and its potential to inform targeted policies to alleviate poverty. Originality/value This paper proposes a new methodology to estimate vulnerability to income and multidimensional poverty.