Sharpening the Welfare-Consistency of the Mainstream Multidimensional Poverty Identification Method, with Illustration on Nigerian Data

Abstract In theory, accounting for nonmonetary dimensions can help sharpen the identification of the poor. In practice, data constraints on nonmonetary dimensions prevent researchers from using the welfare-consistent identification methods traditionally used in monetary poverty measurement. The pragmatic identification methods used when measuring multidimensional poverty are criticized for their lack of welfare-consistency (Ravallion 2011). This paper considers one solution that holds the potential to improve the welfare-consistency of these pragmatic identification methods and illustrates how this solution can be implemented in practice in the context of Nigeria in 2019. The empirical illustration suggests that this solution may substantially affect the identification of the multidimensionally poor. The results also find substantially different poverty comparisons between multidimensional poverty and monetary poverty even though monetary poverty (1) is high in Nigeria in 2019, (2) is very heterogeneously distributed across Nigerian states, and (3) is integrated as one component of the multidimensional poverty measure.