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Monetary and multidimensional measurement of poverty as a determinant of the success or failure of programmes against Poverty. Peruvian case.

The identification of the groups that are going to benefit from the social programs and policies against poverty are really hard to determine. In fact, the process of identification and targeting are decisive to the success or failure of a social program or policy, especially in countries with high level of poverty as Peru.

The crucial variable to determine if someone belong to the target is their poverty situation. Peru uses the common way to measure poverty: monetary.  The Peruvian National Institute of Statistics (INEI) considered monetary poverty to the people in which households the amount of money spend per person is insufficient to get a basic basket of food and no food (living place, education, health, transport, etc.). Extreme poverty refers to the people in which households the amount of money spend per person is insufficient to get a basic basket of food.

For 2015, 21,77% of the population of Peru (6 millions 782 thousand people) were in monetary poverty.  And for the same year the value of the poverty line was of s/. 315 (95.45$ with a exchange rate of 3.3) (Source:INEI).That would be the amount of money a person need in Peru to satisfied their alimentary and no alimentary needs. In this case, poverty is defined by one-dimensional measures,  the money spend in a month. But no one indicator alone can capture the multiple aspects that constitute poverty.  

Multidimensional poverty is made up of several factors that constitute poor people’s experience of deprivation, such as poor health, lack of education, inadequate living standard, lack of income, disempowerment, poor quality of work and threat from violence. More than the monetary measurement It can incorporate a range of indicators to capture the complexity of poverty. (Source : Oxford).

For the case of Peru, the multinational perspective shows a higher level of poverty that the monetary perspective. According to Enrique Vásquez, economic professor at Universidad del Pacífico in Lima, Peru, in a paper about programmes and policies against poverty, this situation allows to show a big problem for social programs and policies: undercoverage and leaks.  The undercoverage means that the programs are not enough for the people that actually need them. The leaks refers that people that benefits from the programs but are not part of the target.

In conclusion, the monetary measurement of poverty can miss a lot of relevant data important for a decisions  making process. A multidimensional measurement can provide a better framework for a better implementation of programmes and policies against poverty. The more policy-relevant information there is available on poverty, the better-equipped policy makers will be to reduce it. 

Natalia Alvarez Espinoza

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Author: studentnovasbe

Master student in Nova Sbe

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