Weighting Dimensions of Poverty Based on People’s Priorities: Constructing a Composite Poverty Index for the Maldives Hans de Kruijk Erasmus University Rotterdam, Netherlands Email: dekruijk@few.eur.nl Martine Rutten Dutch Ministry of Finance and School of Economics, Erasmus University Rotterdam, Netherlands Click here to download working paper

Abstract
Whilst recognising that poverty is a multidimensional concept, many poverty studies fall back to one dimension when it comes to quantifying poverty. A multidimensional concept of poverty raises the question of how to quantify the various dimensions of poverty and how to weigh these dimensions to measure overall poverty. Existing attempts to solve the intractable weighting problem are unsatisfactory because they assign arbitrary (usually equal) weights to each component or obtain weights from the data using factor type analysis which may substantially differ from people’s perceptions about priorities. In the present paper the aggregation problem is solved by using a weighting structure that is derived directly from population preferences. It uses explicit information on the ranking of poverty dimensions as obtained from household surveys. These ranking are transformed into priority weights for each dimension so that a composite index can be obtained. An empirical application to the Maldives is given for the years 1997/8 and 2004, which allows for observing changes in the poverty situation over time for each dimension, for each region and for overall poverty.