Multidimensional Poverty Dynamics in Ethiopia: How do they differ from Consumption-based Poverty Dynamics?

Abstract

Poverty can take many different forms, ranging widely over dimensions both monetary, such as consumption or income, and nonmonetary, such as health and education. One large class of nonmonetary measures of poverty is the multidimensional poverty index (MPI); recent studies document that people identified as poor in one dimension are often different from those who found to be poor in another dimension. This paper extends the literature by examining whether MDP dynamics are similar to the dynamics of a related consumption- based measure of poverty. Using two waves of Ethiopian panel data (2011-12 and 2013-14) we estimate poverty based on a monetary value of real consumption and a nonmonetary weighted deprivation index (our underlying measure of MDP). Similar to studies for other countries, we find that the two estimates of poverty identify significantly different groups of Ethiopians as
poor. A key contribution of this paper is the finding that changes in consumption are largely independent of changes in multidimensional wellbeing: Awareness that an individual’s wellbeing improved over time as measured by improvements in the weighted deprivation index provides no information about whether his or her wellbeing has improved where consumption is concerned.