Researchers at the Oxford Poverty and Human Development Initiative at the University of Oxford have created a new way of measuring poverty which takes into account more factors than income.  Called the “Multidimensional Poverty Index”, it includes factors such as:

• Does a family have a dirt or dung floor?
• Do they have a decent toilet/latrine?
• Must family members travel more than 30 minutes on foot to get clean water?
• Do they live without electricity?
• Is a family member malnourished?
• Are all school aged children enrolled in school?

A household is counted as poor if it is deprived on over 30% of the ten indicators.

What’s interesting (see chart) is that this results in substantial differences in estimations of families living below poverty level when compared to the traditional World Bank measure of $1.25/day (adjusted for purchasing power).

For instance, under this new measure, Ethiopia has almost 90% of population in poverty vs. less than 40% under the $1.25/day measure.  While Tanzania (which does better at getting its people fed, housed and educated) actually have significantly lower estimate of poverty under this new measure.

It will be interesting to see if this new measurement catches on vs. the much easier to measure daily income metric.

Reference: The Economist