The Construction of the multidimensional poverty index of Kenya using Alkire- foster approach,

Abstract

In this paper, the Multidimensional Poverty Index (MPI), a specification of the Alkire-Foster approach, is used to calculate the poverty index of Kenya. This index was computed for 104 countries by Alkire and Santos in 2010. It was launched as a prominent feature of the annual United Nations Development Program (UNDP) Human Development Report, replacing the previous Human Poverty Index. This paper seeks to reconstruct the poverty index which is used in Kenya’s Revenue Allocation formula. The country currently uses a modification of the UNDP’s Human Development Index, which gives weights to different aspects of deprivation. This method that has been dubbed “Lucy’s model,” named after the person who developed it in December 2015. It was approved by the National Assembly of Kenya in 2016 for use by the Commission for Revenue Allocation to distribute funds from the national government to county governments. The paper compares the allocations arrived at by both Lucy’s Model and the Alkire-Foster method in terms of equality of means, variances, correlations and other statistical tests of significance in differences between datasets.