JAGTIV · Previous Year Questions

UPSC

ECONOMY · 2012

Previous Year Question

The Multi-Dimensional Poverty Index developed by the Oxford Poverty and Human Development Initiative with UNDP support covers which of the following?

  1. Deprivation of education, health, assets and services at the household level

  2. Purchasing Power Parity at the national level

  3. Extent of Budget Deficit and GDP growth rate at the national level

Select the correct answer using the code given below:

A.

1 only

B.

2 and 3 only

C.

1 and 3 only

D.

1, 2 and 3

Correct Answer: A

Detailed Solution

The Multidimensional Poverty Index—MPI does not treat poverty merely as a shortage of income. It measures overlapping deprivations experienced by households in education, health and standard of living.

The Global MPI was developed by the Oxford Poverty and Human Development Initiative—OPHI and the UNDP Human Development Report Office. It was introduced in the 2010 Human Development Report.

Statement 1 is correct

The Global MPI uses three dimensions and ten indicators:

Dimension

Indicator

Health

Nutrition

Health

Child mortality

Education

Years of schooling

Education

School attendance

Standard of Living

Cooking fuel

Standard of Living

Sanitation

Standard of Living

Drinking water

Standard of Living

Electricity

Standard of Living

Housing

Standard of Living

Assets

These indicators identify deprivations in education, health, assets and basic services at the household level.

Therefore, Statement 1 is correct.

Calculation of MPI

MPI has two principal components:

  1. Headcount Ratio—H: The proportion of the population identified as multidimensionally poor.

  2. Intensity of Poverty—A: The average weighted deprivation experienced by poor people.

Under the Global MPI, a person is generally classified as multidimensionally poor when their household is deprived in at least one-third, or 33.33%, of the weighted indicators.

For example:

  • If 20% of the population is multidimensionally poor; and

  • Their average deprivation intensity is 40%,

then:

Thus, MPI captures both the incidence and intensity of multidimensional poverty.

Statement 2 is incorrect

Purchasing Power Parity—PPP is a currency-conversion method used for comparing purchasing power, GDP or international monetary poverty lines across countries.

PPP is not a household-deprivation indicator under the Global MPI. MPI measures actual deprivations such as schooling, nutrition, sanitation and electricity.

Therefore, Statement 2 is incorrect.

Statement 3 is incorrect

The Budget Deficit and GDP growth rate are national-level macroeconomic indicators. They do not directly measure multidimensional deprivation experienced by a household.

A country may record rapid GDP growth while some households continue to experience:

  • Malnutrition;

  • Lack of schooling;

  • Inadequate sanitation or drinking water; and

  • Lack of access to clean cooking fuel.

Consequently, Budget Deficit and GDP growth are not included as MPI indicators.

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