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 consumptionbased
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.