Peru: Poverty under two lenses.

How has poverty evolved in Peru in recent years? We employ a multidimensional poverty index, the IPM-P, to analyze and compare the path of poverty in Peru between 2007 and 2020 under different approaches. We intend to show the benefits of using a multidimensional index as a complement to Peru’s official monetary poverty index, mainly to enhance the identification of vulnerable households and the design of public policies. The index’s making follows Alkire & Foster (2011), and includes six dimensions: health, education, basic services, physical environment, social participation, and economic participation. We find that the incidence of multidimensional poverty may have been greater that the incidence of monetary poverty throughout the years. However, the rise in multidimensional poverty between 2019 and 2020 (2,0 pp.) was sharply smaller than the one experienced in terms of monetary poverty (9,9 pp.). On the other hand, around half of the monetary-poor households were not deprived enough to be considered multidimensionally poor in 2020. Furthermore, the poverty profile changes significantly across geographic areas. Specifically, Lima Metropolitana (i.e., the capital city) gathered around a third of the monetary-poor households in 2020, but just 10,7% of the multidimensionally poor ones. The share of the jungle and rural areas in the aggregate poverty levels also increases when switching from the monetary to the multidimensional approach. Finally, we find a stronger correlation between Peruvian households’ self-assessment of their poverty stance and the IPM-P than with the monetary index.