Definition andOrigins

The measurement of multidimensional poverty, as discussed in Chapter 1, involves three fundamental steps: selecting the space, deciding who is poor, and aggregating the information of the poor.

As mentioned in section 2.2.2 and section 3.6.1, a counting approach to identifying the poor can be broken down into the following steps:

1. defining a set of relevant indicators;

2. defining a threshold of satisfaction (deprivation cutoff) for each indicator such that if the person does not reach it, she is considered deprived;

3. creating binary deprivation status for each person in each indicator, where 1 is deprived and 0 is non-deprived;

4. assigning a weight or deprivation value to each considered indicator;

5. producing a deprivation score by taking the weighted sum of deprivations (or counting the number of deprivations, if they are equally weighted);

6. setting a threshold score of poverty (or poverty cutoff) such that if the person has a deprivation score at or above the threshold, she is considered poor.

Most steps involve normative judgements, which are largely discussed in Chapter 6. Step (4) entails deciding whether all deprivations should be given the same weight. Step (6) specifies the extent of deprivations which must be experienced by a person in order to be considered poor which, as outlined in section 2.2.2, can range from experiencing at least one deprivation (union) to experiencing all deprivations (intersection). In practice, either the union or intermediate criteria have been most commonly used; the intersection criterion has rarely been used.

Counting approaches have been widely used in empirical studies, with one developed and one developing region being particularly pioneering in this work: Europe and Latin America. Interestingly, applications of the counting approach have been inspired and mo­tivated by different conceptual approaches, and have developed relatively independently of each other.

One such influential approach was the basic needs approach, which emerged in the mid-1970s as a reaction to the prevailing economic growth-centred approach to development of the time.² The Cocoyoc Declaration, adopted in 1974 by participants in the UNEP/UNCTAD symposium on ‘Patterns of Resource Use, Environment and Development Strategies', articulated this approach as follows: ‘Human beings have basic needs: food, shelter, clothing, health, education... We are still in a stage where the most important concern of development is the level of satisfaction of basic needs for the poorest sections in each society. Development should not be limited to the satisfaction of basic needs. Development includes freedom of expression and impression, the right to give and to receive ideas and stimulus., the right to work' (UNEP/UNCTAD 1975: 896-7). The Cocoyoc Declaration was echoed by several subsequent studies and reports released in 1976.^3,4

2 The study of how economic growth occurs and how it advances basic needs has evolved significantly. See Commission on Growth and Development (2008); Stiglitz, Sen, and Fitoussi (2009); Dreze and Sen (2013).

3 Dag Hammarskjold Foundation (1976); Herrera et al. (1976); ILO (1976).

4 Philosophically, the basic needs approach seeks to elaborate some minimal material requirements of human well-being and justice.

The basic needs approach had a policy focus, but in practice it influenced poverty measurement, especially in Latin America. Until the 1970s, the prevailing approach to measuring poverty used an income poverty line for identifying the poor, which Sen (1981) called the income method.^[119] The first European use of an (implicit) poverty line was by the London School Board during the 1880s in order to exempt destitute families from paying school fees (Gillie 1996).^[120] The poverty line was then used in the seminal surveys of Booth (1894, 1903), Rowntree (1901), and Bowley and Burnett-Hurst (1915), which were conducted in specific cities in the UK. As expressed by Rowntree, the poverty line represented the ‘minimum necessaries for the maintenance of merely physical efficiency' (i.e. nutritional requirements, clothing, fuel, and household sundries) in monetary terms (Townsend 1954: 131).^[121] The poor were those whose household income was below the poverty line corresponding to their family size. In the 1950s, the income method of poverty measurement appeared to be consistent with the growth emphasis of development (Sen 1960). Clearly, a commodity-focused concept of basic needs underlay the income method of poverty measurement, as the poverty line indicated the minimum amount of resources to cover such needs. Subsequently the basic needs approach, alongside other approaches, such as social exclusion, drew attention to the importance of looking at the actual satisfaction of basic needs (or at least access to key commodities), thus fostering the so-called direct method of poverty measurement (Sen 1981). A list of needs considered to be basic alongside minimum levels of satisfaction (cutoffs) would be specified. It is in such a context that counting the number of deprivations naturally emerged as a method of identifying the poor and of monitoring progress towards meeting basic needs.

As the Cocoyoc Declaration quote shows, the basic needs approach was originally quite comprehensive in the goals it regarded as intrinsically important, including, for example, freedom of expression and the right to have decent work. Later, as the approach was intended to have a direct policy impact, empirical studies were conducted in order to determine which goods and services, incomes, and resources were needed for everyone to enjoy a ‘full life' (Streeten et al. 1981). Resources were understood to be of secondary importance and merely as means to ends by most basic needs advocates (Stewart 1985). Unfortunately, when the idea caught on, some operational programmes designed by the International Labour Organization (ILO) and the World Bank, under Robert MacNamara, were ‘focused on commodity inputs to health, education, clothing, shelter, sanitation and hygiene.... The problem was that the overemphasis on commodities misinterpreted the basic needs approach, and in so doing redefined and subverted it' (Alkire 2002a: 116, cf. 2006). The policy urgency was defended as being appropriate and necessary, but in fact it implemented only a subset of priorities of the basic human needs approach (Stewart 1985).

Some years before the emergence of the basic needs approach, Europe started to develop social indicators, which enabled empirical studies of non-monetary aspects of social welfare (Delors 1971). Erikson (1993) describes how criticisms of GNP per capita as a measure of welfare in the 1950s led to a 1954 UN expert group, which proposed to measure well-being using ‘level of living’. In the late 1960s, interest was renewed in constructing ‘a parsimonious set of specific indices covering a broad range of social concerns’ (Vogel 1997: 105). In 1968 Sweden implemented a Level of Living Survey that was repeated and spread in other Scandinavian countries, and this, together with parallel work on social indicators such as Delors (1971), catalysed discussions of poverty measurement: ‘Johansson [(1973)], in his first discussion of the level of living concept, suggested a concentration on “bad conditions”’ (Erikson 1993: 80).^[122]

While basic needs was one concept informing measures of deprivation in Europe (Galtung 1980), this was supplemented by other conceptual motivations.^[123] Atkinson and Marlier (2010) observe that the multidimensional concept of ‘social exclusion’ (Lenoir 1974) has most widely motivated European approaches to measurement for public policy.

Although the social inclusion approach was (and often still is) widely described as ‘relative’, this depends upon the evaluative space. Amartya Sen wrote, ‘[t]he characteristic feature of “absoluteness” is neither constancy over time, nor invariance between different societies, nor concentration merely on food and nutrition. It is an approach of judging a person’s deprivation in absolute terms (in the case of poverty study, in terms of certain specified minimum absolute levels), rather than in purely relative terms vis-a-vis the levels enjoyed by others in the society’ (1985: 673).

A landmark moment in the mainstreaming of social inclusion into European Union (EU) policies occurred at the Lisbon Summit of March 2000, where ‘EU Heads of State and Government decided that the Union should adopt the strategic goal for the next decade of becoming “the most competitive and dynamic knowledge-based economy... with more and better jobs and greater social cohesion”. Importantly, the phrase “social cohesion” appeared in the same sentence as “most competitive economy”' (Atkinson et al. 2002: 17). Another inflection point in Europe was the very explicit political processes for engaging member states in the ‘open method of coordination' for social measures and policies.

A third influential conceptual framework for developing counting-based poverty measures has been Amartya Sen's capability approach, outlined in section 1.1. It gained increasing recognition as providing an appropriate space for evaluating poverty: the space of capabilities and functionings rather than the space of resources upon which basic needs programmeshad come to concentrate.^[125] Applications of counting approaches intending to operationalize the capability approach sought to look at failures in such things as the ability to meet nutritional requirements, be clothed and sheltered, enjoy functional literacy and numeracy, or the power to participate in the social life of the community, which are some of the basic functionings mentioned by Sen from the very start (1980: 218). Yet even in work inspired by the capability framework, the indicators considered in counting approaches are data-constrained, hence often include resource-based indicators that are linked to key functionings, much as in the basic needs approach.

This chapter briefly reviews key empirical implementations of counting approaches to identifying the poor that are motivated by any of the aforementioned conceptual approaches.^[126] Before proceeding to the salient applications of the counting approach, let us clarify that their emphasis is on identifying the poor. Most measurement applications of the counting approach have used the proportion of people identified as poor—the so-called headcount ratio defined in equation (3.23) in section 3.6—for the third fundamental step of poverty measurement: aggregation. By using only the headcount ratio, the poverty measure is not able to discriminate according to the number or extent of deprivations among the poor, what we call intensity.^[127] The focus of this chapter is on the identification step; Chapters 3 and 5 address forms of aggregation that provide more informative poverty measures than the multidimensional headcount ratio.

4.2