THE FUZZY SET APPROACH TO MULTIDIMENSIONAL POVERTY: THE CASE OF ITALY IN THE 1990S

In this chapter we present a survey of the research on the fuzzy approach to poverty measurement which was launched by the contribution of Cerioli and Zani (1990). We emphasize elements which a fuzzy approach takes into account and which are ignored by the conventional analysis of poverty. We note that in the fuzzy approach, choices have to be made concerning at least two additional aspects: i) membership functions and ii) rules for manipulation of the resulting fuzzy sets. A major objective of this chapter is to make clear that these choices must meet some basic logical and substantive requirements to be meaningful. We discuss and propose measures reflecting the multidimensional aspects of deprivation, in particular measures of the degree of overlap between monetary and non-monetary deprivation, and also develop a number of fuzzy measures of the degree of persistence of poverty over time. Two important policy implications of our work should be emphasized. First of a1l, the empirical analysis reported in section 2.4, as we1l as previous research (Giorgi and Verma, 2002; Betti and Verma, 2002), confirm that when analysing living conditions a multidimensional approach to poverty measurement is an important complement to the traditional monetary approach. The fo1lowing particularly important observation was highlighted by our research. It appears that the sma1ler the proportion of poor people in a community, the lower the degree of overlap between monetary and non-monetary deprivation, and hence the less powerful wi1l be policies based only on monetary transfers to individuals or families that are financia1ly poor. On the contrary, when high levels of poverty and deprivation are observed, there tends to be a greater amount of overlap between the degrees of deprivation in the monetary and non-monetary dimensions. This implies that the intensity of total deprivation among the individuals concerned is in fact more severe than what is indicated on the basis of only one dimension. A multidimensional approach is therefore required to tackle poverty. In this chapter we have presented results only for measures of overa1l non-monetary deprivation: the methodology can be equally used to investigate particular dimensions of deprivation such as poor lifestyle, housing or environmental conditions. Such dimension-specific analysis can be much more directly policy-relevant. A detailed analysis taking into account the various dimensions of deprivation can help policy makers in correctly determining aspects of living conditions which require anti-poverty measures. The second important policy implication of fuzzy analysis concerns the longitudinal dimension. Our analysis indicates that the states of poverty and deprivation at the individuaI level may be substantially more persistent than what a conventional approach to poverty measurement shows. This again has important implications for poverty reduction programmes