How Poor is Poor? A novel look at multidimensional poverty in the UK

Abstract

The integrated nature of well-being produces difficulty in evaluating poverty levels and one issue is the neglected of human life aspects, multiple feedback loops, and an over-emphasis on income. In the light of current structural changes a multidimensional poverty measure (MPI), which includes some of those missing dimensions, closely related to the well-being of individuals, is constructed in this paper. Using data from the EU Statistics on Income and Living Conditions Survey, this paper provides a fresh insight into the analysis of multidimensional poverty in the United Kingdom. One of the distinctive feature of the study is the use of polychoric factor loadings to estimate dimensional weights of the MPI, in addition to more arbitrary weighting schemes. This technique consists of a coherent hierarchy of principles, to verify which of the many acknowledged dimensions of poverty hold both theoretical and practical importance. Findings indicate that, the MPI is highly consistent with the conventional measures of poverty and multidimensional poverty has decreased over the period of examination.