As countries assess progress towards MDG1- “Eradication of Extreme Poverty and Hunger”, measurement of trends in welfare is dominated by uni-dimensional poverty measures with little or no emphasis on a broader range of aspects related to quality of life such as education, health and nutrition. While the former approach is widely used in developed countries, a fundamental question remains as to whether the same measure can be extended to developing countries and still provide a fair judgement of progress towards achievement of MDG 1.

This paper presents a comparative assessment of alternative measures of welfare using the Distributive Analysis Stata Package (DASP). It draws from data on a sub-sample of 2000 households in the 2005/06 Uganda Demographic and Health survey (UDHS) for which two measures of welfare are available: the Wealth Index (WI) and Household Consumption Expenditure per Adult Equivalent (HCE). The wealth index is a multidimensional measure computed using Principal Component Analysis (PCA) on selected assets of the household while the Household Consumption per Adult Equivalent is a uni-dimensional measure based on monetary value of household consumption in real terms. An additional composite index is computed to combine the above measures with aspects of health and prevalence of hunger [1].

Using the DASP software, differences in FGT [2] indices are estimated based on the distributions of the three alternative measures of welfare. The paper also presents these distributions using FGT curves in an illustrative comparison of dominance for rural and urban populations.