Multidimensional Approach to Poverty Measurement in Indonesia

Abstract

Poverty is multidimensional phenomenon. The poverty measurement that based on consumption level is insufficient in explaining the multiple deprivations faced by poor. Applying Alkire & Foster’s multidimensional methodology framework by utilizing the National Socio Economic Survey Indonesia data (2011), this study confirmed that the monetary measure of poverty should be complemented with multidimensional poverty measure to capture comprehensive picture of deprivation in Indonesia. Around 62.3% of populations that monetary poverty measurement declares them as non-poor are multidimensional poor. Using the logit and ordered logit model, this study also confirmed that a higher educational attainment of household head leads to a higher probability of being non-poor both in monetary and multidimensional poverty. The paper identifies that health is the major source of multidimensional poverty. Universal health insurance program is needed. Human investment is very important in efforts to reduce poverty.

Keywords

Monetary Poverty — Multidimensional Poverty — Indonesia