Counting and multidimensional poverty measurement

This paper proposes a new methodology for multidimensional poverty measurement consisting of an identification method rho(k) that extends the traditional intersection and union approaches, and a class of poverty measures M-alpha. Our identification step employs two forms of cutoff: one within each dimension to determine whether a person is deprived in that dimension, and a second across dimensions that identifies the poor by 'counting' the dimensions in which a person is deprived. The aggregation step employs the FGT measures, appropriately adjusted to account for multidimensionality. The axioms are presented as joint restrictions on identification and the measures, and the methodology satisfies a range of desirable properties including decomposability. The identification method is particularly well suited for use with ordinal data, as is the first of our measures, the adjusted headcount ratio M-0. We present some dominance results and an interpretation of the adjusted headcount ratio as a measure of unfreedom. Examples from the US and Indonesia illustrate our methodology. (C) 2010 Elsevier B.V. All rights reserved.