A modification to the Alkire-Foster method when data are cardinal

Type Working Paper - The Journal of Economic Inequality
Title A modification to the Alkire-Foster method when data are cardinal
Author(s)
Publication (Day/Month/Year) 2024
URL https://doi.org/10.21203/rs.3.rs-4191155/v1
Abstract
This paper introduces a modification to the standard Alkire-Foster (AF) Method (Alkire and Foster, 2011a,b) for multidimensional poverty measurement. This modification incorporates cardinal information during the identification step when feasible. Following the typical identification-aggregation structure, the adjusted method considers both the number of deprivations and aggregate (or average) achievement for identification and employs the adjusted FGT class of measures for aggregation. The proposed method upholds key axioms, including subgroup decomposability, replication invariance, symmetry, and poverty focus. Empirical results, utilizing data from Indonesia and South Africa, reveal that the modified method is less sensitive to changes in the poverty cutoff and exhibits an enhanced focus on individuals experiencing deeper deprivations.

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