Research Paper ECINEQ Working Paper Series 387
Differences in needs and multidimensional deprivation measurement
Individuals from different demographic population subgroups and households of different size and composition exhibit different needs. Multidimensional deprivation comparisons in presence of these differences in needs have yet to be analysed. This paper proposes a family of multidimensional deprivation indices that explicitly takes into account observed differences in needs across demographically heterogeneous units (i.e., either households of different size and composition or individuals of different population subgroups). The proposed counting family of multidimensional indices builds upon the Alkire and Foster methodology of poverty measurement (J. Public Econ. 95:476-487, 2011) and draws from the one-dimensional parametric equivalence scale literature. It aims to describe how much deprivation two demographically heterogeneous units with different needs must exhibit to be catalogued as equivalently deprived. Differences in needs are considered, in this context, as a legitimate source of differences in multidimensional deprivation incidence. Under this premise and through microsimulation techniques, applied over the 2013 Paraguayan household survey, I evaluate the measurement approaches contained in the proposed family of measures. The obtained results demonstrate that neglecting differences in needs yields biased multidimensional deprivation incidence profiles. Results also shed light on the ability of the proposed measures of this paper to effectively capture these differences in need.