Testing the robustness of the revised multidimensional poverty index for Arab countries
The construction of a multidimensional poverty index (MPI) involves crucial decisions: the choice and definition of indicators, cut-offs and weights. Determining the values of these parameters affects the identification of the poor, the contributions of dimensions and indicators to MPI, and the raking of countries. Since some of the decisions and assumptions involve empirical and statistical considerations, and since the latter decisions has direct implication on the choice of policy options, it is important and vital, that the MPI for a certain region/ country to be robust and consistent with various parameters specifications.
This document sets out the various tools for examining the robustness properties of the revised Arab MPI and its partial indices of the headcount ratio and the poverty intensity, as well as the sensitivity of countries’ ordering when assumptions change. An ordering of entities (countries or population groups) is defined as robust when the order is unchanged as one of the parameter values changes.