Multidimensional Poverty Index: A New Way of Assessing Poverty in Sri Lanka

Sri Lanka has made strong strides towards reducing poverty and is well placed to meet the Millennium Development Goals (MDGs), although many challenges still remain especially in the estate sector and certain conflict-affected districts. Meanwhile, a new tool of measurement, the Multidimensional Poverty Index, may hold the key to better understanding what factors are driving poverty in Sri Lanka the most.

 

A ‘Talking Economics Special Report’ titled Eradicating Poverty in Sri Lanka: Strong Progress But Much Remains To Be Done authored by Wimal Nanayakkara, Senior Visiting Fellow at IPS and the former Director General of the Department of Census and Statistics (DCS), gives a valuable insight into the latest analysis on Sri Lanka’s performance on poverty reduction.

- Watch the video interview below to get a quick overview of his insights

- Read the summary of the findings given below

- View the infographic which captures some key statistics

- Read/download a PDF of the full ‘Special Report’ which contains the detailed analysis on Multidimensional Poverty

 

 

Summary

 

Sri Lanka has achieved the Millennium Development Goal of halving the incidence of Income Poverty before the target year, 2015 in all sectors apart from the estate sector. Recent DCS data show that if prevailing conditions continue, the estate sector is likely to achieve the target before the target year as well. Despite these achievements, recent analysis of survey data paints a rather more alarming picture, calling for the formulation of suitable strategies specifically designed to prevent people on the cusp of the poverty line from slipping back under poverty. As the current situation stands, if the poverty line was raised by 10%, an additional 800,000 people will be designated as being below the poverty line which highlights the precarious position they occupy on the socio-economic scale.

 

In addition, data also draw attention to the fact that there is a huge regional disparity in the incidences of poverty. While it remains true that in all districts (apart from those in the Northern and Eastern provinces – for which inadequate data prevent conclusive comparison) incidences of poverty have been halved by the year 2009/10, the disparity between the districts suggests that although poverty has declined in Sri Lanka, income inequality still persists. Effective policies may have to be formulated to reduce these inequalities further in order to uplift the living conditions of the poorer segments of society.

 

This could be done by understanding the combinations of deprivation
that adversely affect a household at the same time, causing acute poverty. The Multidimensional Poverty Index (MPI) is a new measure that strives to do precisely that by classifying households according to scores tabulated on measures of three broad dimensions; Health, Education and Standard of Living. The MPI can be used as an analytical tool to identify the most vulnerable people, showing aspects in which they are deprived and help to reveal the interconnections among these deprivations. This could help policymakers target resources and formulate policies more effectively to reduce the regional variations further.

 

The Demographic and Health Survey (DHS) 2006/7 conducted by the DCS provides the most appropriate data set to compute the multidimensional poverty related indices while the Household Income and Expenditure Survey (HIES) 2009/10 provide the latest data with a better coverage and therefore both data sets were used in the analysis.

 

The analysis of data showed that along with a reduction in Income Poverty, there was a decline in the percentage of multidimensionally poor people in Sri Lanka, from 7 to 4.7, which indicates that there had been a marginal improvement in the living conditions of those who were in acute poverty.

 

Analysis based on both surveys clearly shows that the health dimension is the main contributing factor towards multidimensional poverty in Sri Lanka. Both surveys also show that inadequate energy consumption and malnutrition are two of the main factors faced by many people in acute poverty, for e.g., 20% of children under 5 years of age are underweight in Sri Lanka, while in the estate sector, this figure jumps to nearly 30% – clearly demonstrating that the urgent attention of health planners and policy-makers are required to address these needs.

 

Gampaha and Colombo districts show the lowest levels of both Income Poverty and Multidimensional Poverty while Jaffna and Batticaloa districts show the highest. The Kurunegala district has the highest share of Multidimensionally Poor people (9.8%), while the Multidimensional Poverty Headcount is 5.9 per cent, illustrating the importance of considering both the poverty headcount indices as well as the percentage of the poor when developing strategies to minimize the regional disparities.

 

View/download the full Special Report (PDF) here
TE Special Report MPI WN Jun2012