The sensitivity of poverty trends to dimensionality and distribution sensitivity in poverty measures—District level analysis for Pakistan

Abstract

AbstractA key feature of recent poverty measurement in many developing countries is the transition from conventional (money metric) approaches to multi‐dimensional approaches. This change in the poverty measurement raises the question of whether the same poverty trends are apparent under the conventional and the multidimensional approaches. To answer this question I used six household‐level surveys for Pakistan fielded between 2004 and 2015. The analysis considers trends at the national, provincial, and district level with a particular focus on the variability in trends due to distribution sensitivity and insensitivity in poverty measures. The district‐level trend analysis leads to the results that the multidimensional measures show a smoother fall in national poverty rates while the conventional measures show rising poverty up until 2008 and then a sharper fall. Almost two‐thirds of all districts show opposite trends in poverty, if conventional rather than multidimensional measures are used, in at least two of the five inter‐survey spells, irrespective of whether distribution‐sensitivity is considered or not. Thus, apparent poverty trends are sensitive to the measurement approach used. Hence, when measurement methods evolve, policy analysts should be cautious in the conclusions they draw from poverty estimates.