The Multi-dimensional Poverty Index developed by 'Oxford Poverty and Human Development initiative with UNDP support covers which of the following? 1. Deprivation of education, health, assets and services at household level 2. Purchasing power parity at national level 3. Extent of budget deficit and GDP growth rate at national level Select the correct answer using the codes given below:
Contents10
- A1 only
- B2 and 3 only
- C1 and 3 only
- D1, 2 and 3
Show answer
Answer: (A) 1 only
The Multidimensional Poverty Index (MPI), developed by Oxford University and UNDP, measures poverty at the household level across three dimensions:
- Health (nutrition, child mortality)
- Education (years of schooling, enrollment)
- Living Standards (cooking fuel, sanitation, water, electricity, floor, assets).
Statement 1 is correct — it captures deprivation at the household level.
Statements 2 and 3 are wrong — PPP, budget deficit, and GDP growth rate are macroeconomic indicators measured at the national level and are NOT part of the MPI.
The MPI's strength is that it goes beyond income to measure lived deprivation.
Answer: 1 only.
The Multidimensional Poverty Index measures actual deprivations in health, education, and living standards at the household level, not just income poverty.
UNDP and Oxford developed MPI as an alternative to income-based poverty measures, focusing on what people actually lack in their daily lives rather than macroeconomic indicators like GDP or budget deficits.
Multidimensional Poverty Index (MPI)
Indian Economy Multi-dimensional Poverty Index Oxford Poverty and Human Development initiative UNDP
Multidimensional Poverty Index: Beyond Income-Based Poverty Measurement
MPI developed by Oxford University and UNDP measures poverty beyond income
Covers 3 dimensions: Health, Education, Living Standards at household level
Does NOT include macroeconomic indicators like PPP, GDP, budget deficit
Uses 10 indicators across the 3 dimensions with equal weightage
The Multidimensional Poverty Index (MPI) revolutionized poverty measurement by moving beyond simple income thresholds. Developed by the Oxford Poverty and Human Development Initiative with UNDP support, it captures the lived reality of deprivation at the household level.
MPI Three Dimensions & Ten Indicators
Dimension | Indicators | Weightage | Deprivation Criteria |
|---|---|---|---|
Health | Nutrition, Child Mortality | 1/3 | Any household member malnourished, child died in family |
Education | Years of Schooling, School Attendance | 1/3 | No member completed 6 years schooling, school-age child not attending |
Living Standards | Cooking Fuel, Sanitation, Water, Electricity, Floor, Assets | 1/3 | Lacks clean fuel, toilet, water, electricity, decent floor, basic assets |
How MPI Works
Household-level measurement: Surveys individual families, not national averages
Equal weightage: Each dimension gets 1/3 weight, each indicator within dimension gets equal sub-weight
Dual cutoff: Person is MPI-poor if deprived in ≥33.3% of weighted indicators
Intensity matters: MPI score reflects both incidence and intensity of poverty
Question Context
This 2012 question tests whether students understand MPI's household-focus versus macroeconomic indicators. Statement 1 correctly identifies MPI's scope, while statements 2 and 3 confuse it with national-level economic measures.
Trap: Confusing MPI with income-based poverty measures that use PPP
Trap: Mixing household-level deprivation indicators with national economic indicators
Trap: Assuming all poverty indices include GDP growth and budget deficit data
Common error: Thinking MPI covers purchasing power parity since it's about poverty
Poverty Measurement Approaches
Indian Economy Purchasing power parity
Different Approaches to Measuring Poverty: Income vs Multidimensional
Income-based poverty uses monetary thresholds like $1.90/day PPP
Multidimensional poverty measures deprivation across health, education, living standards
PPP (Purchasing Power Parity) adjusts for cost differences between countries
India uses both approaches: Tendulkar Committee (income) + MPI (multidimensional)
Income-Based vs Multidimensional Poverty
Aspect | Income-Based Poverty | Multidimensional Poverty (MPI) |
|---|---|---|
Measurement Unit | Individual income/consumption | Household deprivation |
Key Indicator | Money earned/spent per day | Access to basic services |
Uses PPP | Yes - adjusts for price differences | No - focuses on access/quality |
Developed by | World Bank, National Governments | Oxford University + UNDP |
India Example | Tendulkar/Rangarajan Committee lines | India MPI by NITI Aayog |
Why Both Approaches Matter
Income poverty captures purchasing power but misses service access
MPI captures lived deprivation but doesn't measure purchasing power
Policy targeting: Income measures help with cash transfers, MPI helps with service delivery
Complementary use: Countries use both for comprehensive poverty assessment
Don't mix: PPP is for income comparisons, not multidimensional indices
Remember: MPI never uses purchasing power parity adjustments
Distinction: Income poverty = money-based, MPI = access-based
Macroeconomic vs Household Indicators
Indian Economy budget deficit GDP growth rate national level
Macroeconomic Indicators vs Household Welfare Measures
Macroeconomic indicators measure national economic performance
Household indicators measure family-level welfare and deprivation
Budget deficit and GDP growth are macro indicators, not poverty measures
MPI focuses on household level, not national aggregates
Macroeconomic vs Household Level Indicators
Level | Examples | What They Measure | Used For |
|---|---|---|---|
Macroeconomic | GDP Growth, Budget Deficit, PPP | National economic performance | Fiscal policy, international comparisons |
Household | Access to water, sanitation, education | Family-level deprivation | Poverty assessment, service delivery |
Individual | Income, consumption, nutrition status | Personal welfare | Targeted interventions, cash transfers |
Why the Distinction Matters
High GDP growth can coexist with high household poverty (growth without inclusion)
Low budget deficit doesn't guarantee reduced deprivation at household level
Policy focus: Macro indicators guide fiscal policy, household indicators guide social policy
UPSC pattern: Often tests confusion between macro performance and micro welfare
Don't assume: Good macroeconomic performance = low poverty
Remember: Budget deficit is about government finances, not household poverty
Key trap: GDP growth rate measures economic output, not deprivation reduction