MEASUREMENT AND DECOMPOSITION OF MULTIDIMENSIONAL POVERTY IN INDONESIAN

This study addresses the research problem that income-based poverty measures are insufficient to fully capture the complexity of deprivation experienced by households in Indonesia. The main objective is to measure and analyze the Multidimensional Poverty Index (MPI) using the Alkire-Foster (AF) method, drawing on data from the 2014 Indonesia Family Life Survey (IFLS). Specifically, the study decomposes MPI by geographical region rural and urban areas and identifies the relative contributions of the health, education, and living standards dimensions to multidimensional poverty in each area. Methodologically, the AF approach is applied to determine the incidence and intensity of multidimensional poverty, followed by decomposition analysis to assess regional disparities and indicator-level contributions. The findings reveal that 21.7% of Indonesian households are multidimensionally poor, with an average deprivation intensity of 62% and an overall MPI score of 0.35. Rural households experience higher levels of multidimensional poverty than their urban counterparts. The living standards dimension contributes the most to overall MPI (57.77%), followed by education (30.76%) and health (11.46%). Major indicators driving multidimensional poverty include years of schooling, floor condition, and access to clean water. The study concludes that multidimensional poverty in Indonesia is predominantly driven by non-income factors. Therefore, poverty alleviation policies must extend beyond monetary interventions and focus on improving infrastructure, access to education, and health services especially in rural areas. The findings suggest that future policy design should be region-specific and indicator-sensitive to effectively address structural deprivations and promote inclusive development.