Multidimensional Indices of Achievements and Poverty: What Do We Gain and What Do We Lose? - Working Paper 262

Poverty and well-being are multidimensional. Nobody questions that deprivations and achievements go beyond income. There is, however, sharp disagreement on whether the various dimensions of poverty and well-being can be aggregated into a single, multidimensional index in a meaningful way. Is aggregating dimensions of poverty and well-being useful? Is it sensible? Here CGD non-resident fellow Nora Lustig summarizes and contrasts three key papers that respond to these questions in strikingly different ways. At the bottom of the discussion is a fundamental disagreement on the “legitimacy” of the weights used to aggregate dimensions of well-being. Future research will need to focus on how to identify weights in ways that are consistent 1) with welfare economics and 2) with theories of justice. Will we have to choose between the two?