This study compares monetary and multidimensional poverty measures for the Lao
People’s Democratic Republic. Using household data of 2007/2008, we compare the
empirical outcomes of the country’s current official monetary poverty measure with those
of a multidimensional poverty measure. We analyze which population subgroups are
identified as poor by both measures and thus belong to the category of the poorest of the
poor; and we look at which subgroups are identified as poor by only one of the measures
and belong either to the category of the income-poor (identified as poor only by the
monetary measure) or to that of the overlooked poor (identified as poor only by the
multidimensional poverty measure). Furthermore, we examined drivers of these
differences using a multinomial regression model, and found that monetary poverty does
not capture the multiple deprivations of ethnic minorities, who are only identified as poor
when using a multidimensional poverty measure. We conclude that complementing the
monetary poverty measure with a multidimensional poverty index would enable more
effective targeting of poverty reduction efforts.