Does It Matter How We Assess Standard of Living? Evidence from Indian Slums Comparing Monetary and Multidimensional Approaches

Abstract

As part of Sustainable Development Goals, the United Nations have set targets of upgrading slums and reducing poverty in all its dimensions by 2030. Policies towards improving the living conditions of slum-dwellers require proper assessment of their standard of living as well as understanding the associated characteristics. In this paper, using slum-level primary household survey data from three largest Indian cities, we, first, assess the standard of living of slum dwellers using both monetary and non-monetary approaches and then explore how various household and spatial characteristics are consistently or differently associated with both forms of assessments. We use standard monetary indicators, but to assess non-monetary standard of living, use a counting approach framework and justify the selection of specific indicators in the context of slums. Our analysis yields some interesting observations as some characteristics are differently associated with monetary and non-monetary living standards, which should affect policy designs in slums.

From Rags to Riches: Assessing poverty and vulnerability in urban Nepal

“…Firstly, those that focus on immediately available resources that can be used to construct monetary poverty lines: income per capita [1] and consumption per capita [2]. Second, the asset index [3], pioneered in the analysis of DHS [11], focuses on physical wealth or capital. The third group combines both physical and human capital into a multidimensional measure of wealth status, which include here the Progress out of Poverty Index (PPI) [4] [18], the Deprivation index [5] [3] and the UN Habitat slum index [6] [19].…”

“…Second, the asset index [3], pioneered in the analysis of DHS [11], focuses on physical wealth or capital. The third group combines both physical and human capital into a multidimensional measure of wealth status, which include here the Progress out of Poverty Index (PPI) [4] [18], the Deprivation index [5] [3] and the UN Habitat slum index [6] [19]. Finally, self-poor [7] is based on a survey question asking the head of households how they judge their own living standards relative to others in the community.…”

“…Compared to rural settings, urban households must typically spend more on housing, food, education and health-care and yet, despite notions of 'urban advantage', those in poor neighbourhoods and slums frequently have worse health outcomes than their rural counterparts [1]. Given the dynamic context of urban areas, shaped by rural to urban migration, the appropriateness of common measures of wealth used in cross-sectional and other epidemiological studies in LMICs has been questioned [2,3]. Within LMIC contexts, the results of these cross-sectional studies are of particular importance as they are often the main source of reliable data on which to measure key health and social sector outcomes and to inform policy and plan the response.…”

“…Other measures of deprivation broaden the asset perspective to capture measurable capabilities of individuals and households. Multidimensional approaches such as Bag and Seth's deprivation index focus on indicators that assess household capabilities including water and sanitation availability, housing, respiratory risk, education attainment and access to information via mobile phones or equivalent, but do not include measures of current consumption or income [3]. These measures permit a focus on the results and impact of resource availability on access to key functions that determine household and individual welfare.…”

“…This possible dichotomy has limitations. Even if a programme is largely focused on providing a safety net against starvation, assets such adequate sanitation, cooking facilities and basic education remain important to enhance an individual's capability to achieve improved welfare [3]. Similarly, long term livelihoods, partly captured by asset availability also require that citizens have adequate current income to meet daily subsistence needs.…”