A Sensitivity Assessment of Multidimensional Poverty to various sets of Missing Dimensions’ Indicators: The Chilean Case

Preliminary and Incomplete. Please do not cite. Introduction There is worldwide agreement on poverty reduction as a key development policy goal; however there is little agreement on the definition of poverty. The definition of poverty is critical for successful poverty eradication strategies. Traditionally poverty was approached using univariate metrics, such as income or consumption expenditures under the assumption that these variables capture the most relevant aspects of human development. Inspired by the work of economist Amartya Sen (1979) the definition of development has shifted over the last few years. Development is now seen as " an expansion of human freedoms that people value and have reason to value ". There is widespread agreement that poverty is multidimensional; it is not enough to look only at income poverty, we have also to look at other attributes. As Sen points out, " the role of income and wealth.. . has to be integrated into a broader and fuller picture of success and deprivation " (Atkinson, 2002). Following Sen's lead, several institutions have considered this broader definition of poverty, utilizing various dimensions to measure poverty such as income, education, and health. For example, The United Nation's Human Development Index, and Human Poverty Index, amongst others. More recently, there has been a major concern about relevant dimensions that were missing in these analyses, dimensions that are of value to poor people, but where there is scant or unavailable data. In this sense, Alkire (2007) identified four missing dimensions in multidimensional poverty measurements, such as quality of employment, empowerment or agency, physical safety, and the ability to go about without shame. These missing dimensions add relevant information to the standard multidimensional measurements (Ranis et al, 2006). This new information can provide a drastic shift in how we assess poverty, as well as a deeper understanding of poverty, and therefore better poverty targeting for policy purposes. In 2007, the Oxford Poverty and Human Development Initiative, developed specific studies for each dimension, in an attempt to conceptualize each dimension and develop internationally comparable data. The studies identify different aspects within each missing dimension, with their respective indicators. This study is intended to add to the discussion of the identification of the poor, by analyzing the sensitivity to the multidimensional poverty index – using adjusted FGT (Alkire & Foster, 2008)-to a set of indicators of each missing dimension; acknowledging that different approaches to measuring each missing dimension will …