Beyond Consumption: Integrating Local Perceptions and Social Capital into Multidimensional Welfare Indices

Building on Wiegand (2020), who demonstrates that PWRs often diverge from consumption-based rankings, this idea takes a step further by systematically incorporating social capital (e.g., network size, mutual aid, community standing) into multidimensional poverty and welfare indices. The aim is to develop a composite measure that is not only statistically robust but also resonates with local understandings of well-being—something standard indices often miss. While PWRs are appreciated for their allocation outcomes, integrating social capital metrics could explain why certain households are classified differently by communities versus by standard surveys. This would challenge the norm in welfare measurement (as discussed in Moatsos, 2024; Mekonnen, 2024) and provide policymakers with new levers for targeting and evaluation.

References:

1. Welfare Measurement and Poverty Targeting Based on Participatory Wealth Rankings. Martin Wiegand (2020).
2. Global poverty: A Review of Measurement, Levels, and Trends in a Historical Perspective. M. Moatsos (2024). Journal of economic surveys (Print).
3. Estimating Multidimensional Poverty: A New Methodological Approach. Andualem Goshu Mekonnen (2024). Journal of Poverty.