DNP Multidimensional Poverty Index for Colombia

Multidimensional Poverty Index for

Colombia and its applications

(MPI-Colombia)

HDCA Conference, The Hague, 2011

ROBERTO ANGULOBEATRIZ YADIRA DÍAZ

RENATA PARDO

National Planning Department

Division of Social Promotion and Quality of Life

September 2011

Technical team:

Roberto Angulo (DNP-DDS)

Renata Pardo (DNP-DDS)

Beatriz Yadira Díaz (DNP-Essex)

Yolanda Riveros (DNP-DDS)

National Planning Department:

Technical Divisions

OPHI:

Sabina Alkire

Diego Zavaleta

José Manuel Roche

James Foster (George Washington University)

Aknowledge:

Esteban Piedrahíta

Juan Mauricio Ramírez

José Fernando Arias

Hernando José Gómez

“Any exercise of measurement and indexation

is basically an exercise of reflection, analysis

and judgement, and not only of observation,

registration, or chronic”.

Amartya Sen 1998

The MPI-Colombia:

•Is a poverty measure proposed by theNational Planning Department based onthe Alkire&Foster methodology

•Was developed as an instrument fordesign and monitoring public policy

•Complements the income povertymeasure

•Was socialized with the Colombianacademy and policy makers

Colombia’s unit of analysis:

The household

The household as the

analysis unit

• Normative: The guarantee of living conditions is not given by the

responsibility of individuals in isolation - (Political Constitution of

Colombia). Co-responsibility.

• Empirical: There is evidence that in Colombia the household

responds in adverse situations, not individuals in isolation – there is

a combination of actions involving different household members

• Social Policy: Instruments, programs and strategies for reducing

poverty in Colombia are focused at the household level and not on

individuals in isolation - SISBEN, UNIDOS network strategy, Familias

en Acción (conditional cash transfer program)

Dimensions and Variables:

I P M

1. Frequent usage (national or

international). Literature review,

discussion with experts and inclusion in

other indices – IPM-OPHI International,

BNI, LCI y Sisbén III.

2. Variables sensitive to public policy

implementation

3. Availability of data within the Living

Standards Measurement Surveys (LSMS)

Accuracy of the estimated

variables for each of the

study’s domains (ecv<15%).

*DANE follows:

0-7: Accurate estimation

8-14: acceptable accuracy

15-20 : accuracy is not so good

20-25: inaccurate

Choosing dimensions and variables

Criteria for selecting

variablesCriteria for validating

variables

Dimensions and variables

Education Childhood & youth

Labor Health Public utilities &

housing conditions

Household education conditions

Educational achievement: A

household is deprived if the average

level of education for individuals 15

and older within the household is

below 9.

Literacy: A household is deprived if at

least one household member 15 or

older does not know how to read or

write

Childhood and youth

conditions

School attendance: a household is

deprived if at least one child between ages

6 and 16 within the household does not

attend school

No school lag: a household is deprived if

any of the children between ages 7 and 17

is lagging in school (approved school years

is less than the normative number of school

years)

Access to child care services: A household

is deprived if at least one child between 0

and 5 years old, does not have

simultaneous access to health, proper

nutrition, and adult supervision or

education.

Children not working: A household is

deprived if there is at least one child

between 12 and 17 in child labor conditions

Labor

Absence of long-term

unemployment: A household is

deprived if there is someone in

long-term unemployment (>12

months)

Formal employment: A household

is deprived if there is at least

someone holding an informal job or

someone in unemployment.

Salud

Health insurance: A household is

deprived if there is at least one member

(over 5 years old) without health

insurance.

Access to health services: A household is

deprived if at least one household

member faced access barriers to health

care services when needed.

Servicios públicos y

condiciones de la vivienda

Access to drinking water: Urban households are deprived

they have no access to public water services.

Rural households - deprived when the water used to prepare

food is obtained from a well, rainwater, a river, spring water

source, public well, water truck or water carrier

Adequate elimination of sewer waste: Urban households –

deprived if they have no access to public sewer service. Rural

households - deprived if they have a toilet without a sewer

connection, a latrine or if they simply do not have a sewage

system

Adequate flooring: Households with dirt floors are deprived

Adequate walls: Urban households - deprived when exterior

walls are built of untreated wood, boards, planks, guadua (a

type of bamboo) or other vegetable, zinc, cloth, cardboard,

waste material or when no exterior walls exist

madera burda, tabla, tablón, guadua, otro vegetal, Zinc, tela,

cartón, deshechos y sin paredes. For Rural households -

untreated wood & board are considered adequate materials

No critical overcrowding: Urban households deprived if there

are 3 or more p.p.r. Rural households – more than 3 p.p.r.

Dimensions on a scale: Selecting the

weighting structure and the cut-offs

Weighting

scheme

Nested weighting structure:

•Each dimension has the same weight (0.2)

•Each variable has the same weight within

each dimension

Weighting scheme

Dimensions (5) & variables (15)

EducationChildhood & youth

conditionsLabor Health

Public utilities &

housing conditions

Educational

achievement

Literacy

School

atendance

No school

lag

Access to

child care

services

Absence of

child

employment

Absence of

long-term

unemployment

Health insurance

Access to health

care services

when needed

Access to

improved

drinking water

Adequate

flooring

No critical

overcrowding

Adequate

elimination of

sewer waste

Adequate

walls

Formal

employment0.1

0.1

0.1

0.05

0.04

0.2 0.2 0.2 0.2 0.2

Criteria for selecting k:

1. Sample estimates robustness for each of the MPI

indicators (H, M0, M1 & M2). evc<15% for each of the

analysis domain

Robust band of k values: H & M0 [k=1/15, k=6/15]

M1 & M2 [k=1/15, k=5/15]

2. Statistical significance: no overlap of confidence interval

at 95% for the estimated measures.

Second Cut-off point k

Second cut-off point:

identifying the poor

Criterion of reasonability

Weighting scheme and

cut-off point k

MedianPopulation that perceives themselves as poor 5.0Population below the income poverty line 5.1Population that perceives themselves as poor and is below the income poverty line

5.4

Non-poor population by perception 3.0Population over income poverty line 3.0Total population 3.8

Median of the number of deprivations count C, 2008

Source: DNP-SPSCV calculations using SMLS 2008

A non-poor person (objectively or subjectively) faces on average 3 deprivations,

which suggests that with a low value of k we would capture people with

deprivations not necessarily related to poverty conditions.

Chosen cut-off k=5/15, that is 33% of

deprivations: H & M0

Weighting scheme and

cut-off point k

Measurement results

K=5/15

Source: DNP, DDS, SPSCV. 2011

K 1997 2003 2008 2010

5/15 48% 47% 45% 43%

Poverty headcount ratio (H)

Average deprivation share (A)

60.4%

49.2%

34.7%30.4%

0%

10%

20%

30%

40%

50%

60%

70%

1997 2003 2008 2010

23

Deprivation rates

Poor vs. non-poor

SOURCE: DNP-DDS-SPSCV

1%

2%

1%

8%

4%

2%

9%

6%

10%

6%

3%

13%

27%

43%

75%

8%

13%

16%

16%

17%

20%

22%

29%

30%

30%

45%

47%

62%

95%

99%

External wall materials

Child labor

School attendance

Longstanding unemployment

Access to health care services if …

Floors

Access to infant care services

Access to improved water sources

Overcrowding

Elimination of sewer waste

Illiteracy

Healthcare coverage

School lag

Educational achievement

Formal employment rate

Percentage of households facing deprivation in each variable

Poor Non-poor

Headcount ratio (H) urban-rural

K=5/15

0%

20%

40%

60%

80%

100%

1997 2003 2008 2010

51%40%

27% 23%

86%77%

60%53%

Headcount ratio (H)

Urban Rural

1.69 1.93

2.21 2.26

1

2

3

1997 2003 2008 2010

H rural/H urban

Poverty decreases notably, but

urban-rural differences increase

Source: DNP, DDS, SPSCV. 2011

Adjusted headcount ratio,

poverty gap and severity

results

Adjusted Headcount ratio (M0) K=5/15

Source: DNP, DDS, SPSCV. 2011

0%

20%

40% 29%23%

16%13%

1997 2003 2008 2010

0%

10%

20%

M1 M2

23% 20%

17% 15%

11%10%

9%8%

1997

2003

2008

2010

Gap (M1) &

Severity (M2)

K=4/11

Dominance analysis

I P M

1. For any value of k for

every year of analysis

(1997-2010 National)

Headcount ratio (H) for any value

of k/15 (1997-2008)

Source: DNP, DDS, SPSCV. 2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1997

2003

2008

2010

Adjusted headcount ratio (M0) for

any value of k/15 (1997-2008)

Source: DNP, DDS, SPSCV. 2010

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1997

2003

2008

2010

Adjusted poverty gap (M1) for any

value of k (1997-2010)

Fuente: DNP, DDS, SPSCV. 2010

0%

5%

10%

15%

20%

25%

30%

35%

40%

1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11

1997

2003

2008

2010

Adjusted poverty severity (M2) for

any value of k (1997-2008)

Fuente: DNP, DDS, SPSCV. 2010

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11

1997

2003

2008

2010

a) The lines don’t intersect: Poverty has

decreased between 1997 and 2010 for any

value of k

b) The line ordering remains: Poverty has

decrease for all measures: headcount ratio,

adjusted headcount ratio, gap and severity

The poverty dominance analysis

allows to make conclusions that

are independet from the cut-off

point k selection

Further research

• Dimensions and variables for possible

consideration

– Quality of services: education, health, water provision

– Security and dignity

– Political participation

– Quality of employment

• Alternative schemes for assigning weights

– Data driven

– Budget allocation

– Collective preferences (participative processes)

MPI Colombia as an

instrument for public policy

design

3 applications

Poverty maps

Municipal MPI Colombia

(geographical targeting)

1

MPI proxy based on Census Data 2005

Municipal MPI Colombia

Headcount ratio, urban-rural areas, 2005

Municipal poverty headcount ratio for urban

areas, k=5/15, 2005

Municipal poverty headcount ratio for rural areas,

k=5/15, 2005

MPI-Colombia within the methodology for social

promotion from the extreme poverty strategy

2

I P M

A family is “promoted” from if:

Sufficient condition:

Not in extreme income

povertyNot multidimensionally

poor

&

MPI-Colombia goal for the Government’s National

Development Plan 2010-2014 & for monitoring

poverty reduction

3

From multidimensional to multisectorial…

15 goals I P M

If the Plan is accomplished, if

every ministry makes its job

and spends the committed

resources, the MPI decreases to

22% (more than 3 million

people out of poverty).

51

Poverty committee: monitoring poverty reduction

▪ Leaders

– Counselor for the Presidency

– National Planning Department

▪ Permanent members

– Ministry of Health

– Ministry of Labor

– Ministry of Housing

– Ministry of Agriculture

– Ministry of Education

– Ministry of Finance

MANDATORY PRESENCE

The President of Colombia

PobrezaLínea Base

PND 2008Dato 2010 Análisis

Meta

2011

Meta

cuatrienio

MPI (Multidimensional Poverty) 34.7% 30.4% 25.6% 22.5%

Educational achievement (≥15 yrs)

Literacy (≥15 yrs)

58.8% 55.4% 54.3% 56.8%

14.2% 13.2% 12.5% 12.0%

School attendance (6-16)

No school lag (7-17)

Access to child care services (0-5)

Children not working (12-17)

5.4% 4.6% 4.4% 5.0%

33.4% 35.1% 33.9% 33.1%

12.1% 11.8% 11.5% 10.6%

5.5% 4.6% 3.6% 2.9%

Long-term unemployment

Formal employment

9.6% 9.9% 9.5% 9.3%

80.6% 80.9% 77.2% 74.7%

Health insurance

Access to health services

24.2% 21.0% 8.7% 0.5%

8.9% 6.9% 5.3% 2.4%

Access to water source

Adequate sewage system

Adequate floors

Adequate external walls

No critical overcrowding

12.9% 11.6% 11.2% 10.9%

14.1% 12.0% 11.6% 11.3%

7.5% 6.3% 5.9% 5.6%

3.1% 3.0% 2.4% 2.1%

15.7% 15.1% 11.1% 8.4%

FUENTE: DNP-DDS-SPSCV

0%-10% avance 10%-25% avance >25% avance

A(1)

D(4)

B(2)

C(3)

E(5)

“If it was not for the hope that the scientific study of

social actions can lead to practical results in favor of

social improvement, not few students would have

considered the time devoted to these studies as lost.

This is true for all social sciences but especially for

economics. Because this aspect is precisely what

interests or inspires the most”.

PIGOU, A. C. (1920). The economics of welfare

54

Thank you