Estimating multidimensional poverty and vulnerability to multidimensional poverty : a new methodological approach

Abstract

This paper proposes a new multidimensional poverty and vulnerability estimation index that expands traditional poverty measurement by incorporating extent and severity parameters. It also introduces a vulnerability index to assess the risk of falling into or remaining in poverty. The methodology is simple, robust against measurement errors and outliers, and meets key multidimensional poverty axioms. Using Ethiopian data, the study estimates that 38% of the population experiences multidimensional poverty, with 25.58 million people at risk of staying in poverty and 12.65 million at risk of falling into it. The results are compared with existing approaches to highlight the method’s effectiveness.