Multidimensional Poverty Index for Colombia and its applications (MPI-Colombia) HDCA Conference, The Hague, 2011 ROBERTO ANGULO BEATRIZ 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 RocheJames Foster (George Washington University) Aknowledge: Esteban Piedrahíta Juan Mauricio Ramírez José Fernando Arias Hernando José Gómez
“Any exercise of measurement and indexationis 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
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)
Choosing dimensions and variables Criteria for selecting Criteria for validating variables variables1. Frequent usage (national or Accuracy of the estimated international). Literature review, variables for each of the discussion with experts and inclusion in study’s domains (ecv<15%). other indices – IPM-OPHI International, BNI, LCI y Sisbén III. *DANE follows: 0-7: Accurate estimation2. Variables sensitive to public policy 8-14: acceptable accuracy 15-20 : accuracy is not so good implementation 20-25: inaccurate3. Availability of data within the Living Standards Measurement Surveys (LSMS)
Dimensions and variablesEducation Childhood & Labor Health Public utilities & youth 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 conditionsSchool attendance: a household isdeprived if at least one child between ages6 and 16 within the household does notattend schoolNo school lag: a household is deprived ifany of the children between ages 7 and 17is lagging in school (approved school yearsis less than the normative number of schoolyears)Access to child care services: A householdis deprived if at least one child between 0and 5 years old, does not havesimultaneous access to health, propernutrition, and adult supervision oreducation.Children not working: A household isdeprived if there is at least one childbetween 12 and 17 in child labor conditions
LaborAbsence of long-termunemployment: A household isdeprived if there is someone inlong-term unemployment (>12months)Formal employment: A householdis deprived if there is at leastsomeone holding an informal job orsomeone in unemployment.
SaludHealth insurance: A household isdeprived if there is at least one member(over 5 years old) without healthinsurance.Access to health services: A household isdeprived if at least one householdmember faced access barriers to healthcare services when needed.
Servicios públicos y condiciones de la viviendaAccess to drinking water: Urban households are deprivedthey have no access to public water services.Rural households - deprived when the water used to preparefood is obtained from a well, rainwater, a river, spring watersource, public well, water truck or water carrierAdequate elimination of sewer waste: Urban households –deprived if they have no access to public sewer service. Ruralhouseholds - deprived if they have a toilet without a sewerconnection, a latrine or if they simply do not have a sewagesystemAdequate flooring: Households with dirt floors are deprivedAdequate walls: Urban households - deprived when exteriorwalls are built of untreated wood, boards, planks, guadua (atype of bamboo) or other vegetable, zinc, cloth, cardboard,waste material or when no exterior walls existmadera burda, tabla, tablón, guadua, otro vegetal, Zinc, tela,cartón, deshechos y sin paredes. For Rural households -untreated wood & board are considered adequate materialsNo critical overcrowding: Urban households deprived if thereare 3 or more p.p.r. Rural households – more than 3 p.p.r.
Dimensions on a scale: Selecting theweighting structure and the cut-offs
Weighting scheme Weighting schemeNested weighting structure:•Each dimension has the same weight (0.2)•Each variable has the same weight withineach dimension
Dimensions (5) & variables (15) 0.2 0.2 0.2 0.2 0.2 Childhood & youth Public utilities & Education Labor Health conditions housing conditionsEducational School Absence of Health insurance Access toachievement atendance long-term improved unemployment drinking water No school Access to health Literacy Adequate lag care services elimination of Formal when needed sewer waste 0.1 employment Access to 0.1 Adequate child care 0.1 flooring services Adequate walls Absence of No critical child overcrowding employment 0.04 0.05
Second Cut-off point k Second cut-off point: identifying the poorCriteria 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.
Weighting scheme and cut-off point k Criterion of reasonability Median of the number of deprivations count C, 2008 Median Population that perceives themselves as poor 5.0 Population below the income poverty line 5.1 Population that perceives themselves as poor and 5.4 is below the income poverty line Non-poor population by perception 3.0 Population over income poverty line 3.0 Total population 3.8 Source: DNP-SPSCV calculations using SMLS 2008A non-poor person (objectively or subjectively) faces on average 3 deprivations,which suggests that with a low value of k we would capture people withdeprivations not necessarily related to poverty conditions.
Weighting scheme and cut-off point kChosen cut-off k=5/15, that is 33% ofdeprivations: H & M0
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)100%90%80%70%60% 199750% 2003 200840% 201030%20%10% 0% Source: DNP, DDS, SPSCV. 2011
Adjusted headcount ratio (M0) for any value of k/15 (1997-2008)1.000.900.800.700.60 19970.50 2003 20080.40 20100.300.200.100.00 Source: DNP, DDS, SPSCV. 2010
Adjusted poverty gap (M1) for any value of k (1997-2010)40%35%30%25% 199720% 2003 200815% 201010%5%0% 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 Fuente: DNP, DDS, SPSCV. 2010
Adjusted poverty severity (M2) for any value of k (1997-2008)0.400.350.300.25 19970.20 2003 20080.15 20100.100.050.00 1/11 2/11 3/11 4/11 5/11 6/11 7/11 8/11 9/11 10/11 11/11 Fuente: DNP, DDS, SPSCV. 2010
a) The lines don’t intersect: Poverty hasdecreased between 1997 and 2010 for any value of kb) The line ordering remains: Poverty hasdecrease for all measures: headcount ratio,adjusted headcount ratio, gap and severity
The poverty dominance analysisallows to make conclusions thatare 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 aninstrument for public policy design 3 applications
Municipal MPI Colombia Headcount ratio, urban-rural areas, 2005Municipal poverty headcount ratio for urban Municipal poverty headcount ratio for rural areas, areas, k=5/15, 2005 k=5/15, 2005 MPI proxy based on Census Data 2005
2 MPI-Colombia within the methodology for socialpromotion from the extreme poverty strategy
A family is “promoted” from if:Sufficient condition: & I P MNot in extreme income Not multidimensionally poverty poor
3MPI-Colombia goal for the Government’s National Development Plan 2010- 2014 & for monitoring poverty reduction
From multidimensional to multisectorial… 15 goals I P M
If the Plan is accomplished, if every ministry makes its job and spends the committedresources, the MPI decreases to 22% (more than 3 million people out of poverty).
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 51
0%-10% avance 10%-25% avance >25% avance Línea Base Meta Meta Pobreza Dato 2010 Análisis PND 2008 2011 cuatrienio MPI (Multidimensional Poverty) 34.7% 30.4% 25.6% 22.5% Educational achievement (≥15 yrs) 58.8% 55.4% 54.3% 56.8% A(1) Literacy (≥15 yrs) 14.2% 13.2% 12.5% 12.0% School attendance (6-16) 5.4% 4.6% 4.4% 5.0% No school lag (7-17) 33.4% 35.1% 33.9% 33.1% B(2) Access to child care services (0-5) 12.1% 11.8% 11.5% 10.6% Children not working (12-17) 5.5% 4.6% 3.6% 2.9% Long-term unemployment 9.6% 9.9% 9.5% 9.3% C(3) Formal employment 80.6% 80.9% 77.2% 74.7% Health insurance 24.2% 21.0% 8.7% 0.5% D(4) Access to health services 8.9% 6.9% 5.3% 2.4% Access to water source 12.9% 11.6% 11.2% 10.9% Adequate sewage system 14.1% 12.0% 11.6% 11.3% E(5) Adequate floors 7.5% 6.3% 5.9% 5.6% Adequate external walls 3.1% 3.0% 2.4% 2.1% No critical overcrowding 15.7% 15.1% 11.1% 8.4%FUENTE: DNP-DDS-SPSCV
“If it was not for the hope that the scientific study ofsocial 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