The contemporary, income and consumption approaches
to poverty definition and measurement, which are unidimensional in
nature, are unable to capture multiple dimensions of poverty. The
multidimensional approach operationalized here in the structural
equation framework suggests that the multidimensionality of poverty
hypothesis holds for the population in Kathmandu, Nepal, including
economic well-being, capability, and social inclusion. While all of these
dimensions are integral, the capability dimension appears to be highly
influential, affecting every other poverty dimension. This paper identifies
indicators appropriate to measure different poverty dimensions and,
although the multidimensional approach necessitates further work
for more simplified and policy relevant application, alternative ways are
explored with their practical implications.