Rethinking Dimensions: The South African Multidimensional Poverty Index

The growth of literature on multidimensional poverty measures generates an uncertainty about which dimensions best capture the extent of poverty. This paper applies multiple correspondence analysis in the context of multidimensional poverty in South Africa to identify statistically valid additional dimensions using National Income Dynamics Study data of 2012. The results confirm the argument that economic status (lack of employment) and financial commitment (over-indebtedness) can be regarded as important dimensions, as their occurrence constrains households from participating in the activities essential in modern society. It is therefore proposed that, in addition to health, education, and living standard dimensions, both economic status and financial commitments should be included in the framework for the South African multidimensional poverty analysis. A central contribution of this work is a proposal of a hybrid multidimensional measure which recommends a combination of both non-monetary and monetary indicators, in particular over-indebtedness.