Vulnerability to Multidimensional Poverty: Peru, 1998–2002

We approach multidimensional poverty from the viewpoint of a forward-looking, risk-averse household. We consider the fear to face hardship in any well-being dimension as a relevant form of deprivation, since “peace of mind” is also a component of overall well-being. We are thus concerned with “vulnerability to multidimensional poverty.” As we discuss how such vulnerability should be measured, we find that attention must be paid not only to how well-being dimensions correlate over a given population, but also to how they correlate over the states of the world. Data from Peru illustrate.