Abstract
The aim of this paper is to introduce a new approach for the synthesis and analysis of multidimensional poverty and well-being indicators. Our general perspective is inspired by the theoretical foundations of the capability approach and sustainable human development paradigm. The new synthesis of indicators aims at monitoring outcomes of units of interest. Its defining features include: full sensitiveness, continuity, flexibility in substitution between dimensions, and the straightforward interpretation of the results. All these properties are obtained through a transparent and accountable process that is fully open to public scrutiny and reason (as suggested by Amartya Sen). The main contribution of this approach is that the degree of substitutability between dimensions can be directly linked to the general level of well-being of a person, which addresses the so-called “inescapable arbitrariness” issue discussed by Anand and Sen (Concepts of human development and poverty: a multidimensional perspective. Human Development Papers. UNDP, New York, 1997). The new synthesis proposed opens up new possibilities for different types of applications, including monitoring and evaluating development programmes.
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10 January 2017
An erratum to this article has been published.
Notes
For simplicity, and without loss of generality, achievements are assumed to be bounded between 0 (worst possible achievement in a dimension) and 1 (best possible achievement in a dimension).
This is a long process to be accomplished with a great deal of agreement (Clark and Qizilbash 2002).
Capability is defined as the various combinations of functionings (beings and doings) that the person can achieve (Sen 1992). In other words, capabilities are people’s real freedom to enjoy being and doing they value and have reason to value (Sen 1980, 1985b, 1992). Notice that assessments from a capability approach perspective takes note of what “a person can do in line with his or her conception of the good” (Sen 1985a: 206) and recognizes people as responsible persons (Sen 1999). If a functioning is an achievement, whereas a capability is the opportunity and the ability to achieve, functionings are, in a sense, more directly related to living conditions, since they reflect different aspects of everyday life.
This is similar to the idea of equality of opportunity (Roemer 1998).
For counting indexes the function also formally depends on the choice of cut-offs.
See for example the special issue in Social Indicators Research including Trani et al. (2013) as well as.
A reduction in the income of any person currently below the poverty line will leave the headcount unchanged, ceteris paribus (Sen 1981: 11).
Clark and Hulme (2010) underline that headcount measures say nothing about the extent or magnitude of income shortfalls below the poverty line, leaving aside the very real issue of where to draw the poverty line.
The theory of fuzzy sets and fuzzy categories is a potential tool for dealing with shortcoming of cutoffs (see e.g. Zimmermann 2001).
In this respect Anand and Sen (1997: 6) write: “Since any choice of weights should be open to questioning and debating in public discussions, it is crucial that the judgments that are implicit in such weighting be made as clear and comprehensible as possible, and thus be open to public scrutiny”.
In order to avoid these difficulties, Mauro et al. (2017) propose a procedure for harmonisation and alignment of variables based on public scrutiny of specially designed survey questions. This procedure is appropriate for our class of indicators and will help facilitate the interpretation of our results.
For α = 1, there is perfect substitutability between the sub-indexes, and as α increases from 1 the elasticity of substitution decreases monotonically from ∞ to 0.
The hypothesis of g(·) > 1 is required to imply the convexity of the curves to the origin.
The choice of μ for measuring the level of individual well-being used to characterise the heterogeneity structure is not purely arbitrary. A sensitivity analysis using different measures (e.g. an iterative method leading to a sufficient degree of convergence after 3–4 iterations) showed no significant differences in the final measurements, so that a simple function as the arithmetic mean seems the most natural choice in absence of additional information on the structure of substitutability rates.
When α = 0 the function is not defined for μ < 0, but since all variables are assumed to be bounded between 0 and 1, their arithmetic mean is non-negative, so that the function is defined in the domain.
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Acknowledgements
This is part of a long term research project on Human development measurement started in 2009. Consequently, the authors would like to thank many different people and institutions. Financial support from the Europe Aid project “Umanamente” in the early phase of the research project with Oxfam Italy (2009/2010) is gratefully acknowledged. The authors are also grateful to Caterina Arciprete, Enrica Chiappero Martinetti, David A. Clark, Flavio Comim, Pasquale De Muro, Marco Fattore, Alex Apsan Frediani, Maria Laura Di Tommaso, Andrea Ferrannini, Richard Jolly, Martina Mennon, Federico Perali, Gustav Ranis for their comments. This paper has also benefited from comments received from participants at the following events: the conference on “Twenty Years of Human Development: The Past and the Future of the Human Development Index”, St Edmund’s College, University of Cambridge, UK, 28–29, January 2010; the PRIN project events between 2011 and 2013 financed by MIUR; the workshop on “Capabitaly” in Rome 7 April 2014; the conference of AIQUAV in Florence, December 2015; and finally the Cambridge Capability Conference, at the Centre of Development Studies, University of Cambridge, 13–14 June 2016. The authors have also benefited from continuous interactions with academics participating in the Italian colloquia on the Capability Approach. The usual disclaimers apply.
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An erratum to this article is available at https://doi.org/10.1007/s11205-016-1548-2.
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Mauro, V., Biggeri, M. & Maggino, F. Measuring and Monitoring Poverty and Well-Being: A New Approach for the Synthesis of Multidimensionality. Soc Indic Res 135, 75–89 (2018). https://doi.org/10.1007/s11205-016-1484-1
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DOI: https://doi.org/10.1007/s11205-016-1484-1