Challenges in designing national multidimensional poverty measures

Countries are increasingly interested in having an official multidimensional poverty index (MPI). This is the expression of a growing consensus regarding the limitations of income poverty measures as standalone indicator. This paper analyses the challenges in designing such indices. Specifically, it addresses the selection of the unit of identification, the selection of dimensions and indicators, including the issue of missing values and the debate on whether to include an indicator of monetary deprivation or not, the weighting structure and the poverty cutoff. In general, for all the reviewed items, the bottom line is that there is no canonical procedure for making these choices. It is essential to critically assess the advantages and disadvantages of each option and the conceptual implications entailed, as well as to complete a careful empirical analysis, via robustness, sensitivity and bias checks, of the implications of the decisions taken.