A Tale of Two Poverties in Peru: From Monetary to Multidimensional

How has poverty evolved in Peru in recent years? This article uses a multidimensional poverty index, the IPM-P, to analyze and compare the trajectory of poverty in Peru between 2007 and 2020 from different perspectives. The objective is to illustrate the benefits of using a multidimensional indicator to complement the official monetary poverty measure, specifically to improve the identification of vulnerable households and the design of public policies. The index is based on the methodology of Alkire and Foster (2011) and covers six dimensions: health, education, basic services, physical environment, social participation, and economic participation. Among the main findings, it is observed that the incidence of multidimensional poverty was higher than the incidence of monetary poverty throughout the entire analysis period. However, the increase in multidimensional poverty between 2019 and 2020 (2.0 percentage points) was markedly lower than that observed for monetary poverty (9.9 percentage points). On the other hand, about half of those classified as monetarily poor did not experience sufficient deprivations to be considered multidimensionally poor in 2020 under the established metrics. The profile of the poor by geographic area also differs between monetary and multidimensional poverty measures. Specifically, Metropolitan Lima accounted for one-third of those living in monetary poverty in 2020, but only 10.7% of those living in multidimensional poverty. The share of the jungle and rural areas in total poverty also increases when shifting from the monetary to the multidimensional approach. Finally, there is a stronger correlation between Peruvian households’ self-perception of their poverty status and the IPM-P than with the monetary poverty index.