Robert M. La Follette School of Public Affairs
Sunday, June 14, 2015

Students suggest shift in how U.S. agency measures poverty

La Follette School students have presented new ways to think about measuring global poverty to the Millennium Challenge Corporation, a U.S. agency that dispenses foreign aid to promote development in low-income and lower-middle income countries.

Tahira Chaudary, Mike Christopherson, Erik Dolson, Ian Peterson, Diana Rosales-Mitte, Christopher Russell and Kimberly Wild produced the report for the spring Workshop in International Public Affairs taught by Melanie Manion.

The report discusses the distribution of global poverty and the extent to which global measures adequately represent and capture poverty. “The MCC uses the World Bank’s gross national income per capita metric for this purpose,” Dolson says. “Countries with incomes below $1,045 are low-income countries while those with incomes between $1,046 and $4,125 are considered lower-middle Income countries. Both groups are eligible for MCC assistance, but a country that has an income above $4,125 is ineligible.”

The catch is that a substantial portion of the world’s poor do not live in countries in either of the two groups and are therefore ineligible for MCC assistance, which is prompting the MCC to seek to broaden and improve its definition of poverty, Dolson says. “We recommend that the MCC adopt a new metric that combines the status quo and an alternative poverty metric: the global multidimensional poverty index.”

The students analyzed two alternative metrics that provide a more accurate picture of global poverty than the status quo, the World Bank’s gross national income per capita. “We find that both metrics offer substantial improvements over the status quo because they broaden the scope of poverty, increasing the number of poor that the MCC can serve,” Dolson says. “However, we recommend that the MCC adapt the Global Multidimensional Poverty Index inaugurated in 2010 by the Oxford Poverty and Human Development Initiative and the UN Development Programme.”