Formulating framework for subjective poverty index / Azhana Othman

Subjective poverty is an individual assessment of their own poverty status. The poor have their own understanding and interpretation of their socio-economic situation. Poverty could be analyzed in a more comprehensive and better dimension by combining objective and subjective measures. Thus, Malaysia as one of the emerging economies also should compile objective and subjective measures on poverty. The Millennium Development Goals Report (MDGR, 2015) designates that Malaysia had successful eliminated objective poverty. However, poverty continues to exist. In zakat context, the number of applicants continuous increase. There are three objectives of the study. Firstly, to determine the characteristics of subjective poor. Secondly to propose subjective poverty index (SPI) as an alternative poverty measurement and lastly, to compare poverty in multifaceted poverty measures. The empirical analysis was based of 507 zakat applicants of poor and needy in Melaka. The data was analysed using qualitative and quantitative methods in four phases of analysis. In phase 1, comprise the Participatory Poverty Assessment (PPA). The perception of individuals for the poverty, the relationship of this perception with the subjective poverty and the sociodemographic factors were analysed. In phase 2, a quantitative survey was administered to analyse the characteristics of the subjective poverty and developing the indicators. Results of logistic regression showed the possible determinants are ability to get work, level of education, status of employment, health status, other source income resource, moral support and financial stress. Next, in phase 3, this selected weighted socioeconomic indicators were proposed as Subjective Poverty Index (SPI). Lastly, in phase 4, multifaceted poverty measures were conduct as comparative studies on poverty incidence. This study confirmed that more people appear to feel poor using subjective measure. The analysis gives important clues that adding SPI in zakat institutions' poverty measurement could better enhance the process of identifying and selecting eligible asnaf.