IDEAS home Printed from https://ideas.repec.org/a/ctl/louvde/v88y2022i1p79-120.html
   My bibliography  Save this article

Water, Walls, and Bicycles: Wealth Index Composition Using Census Microdata

Author

Listed:
  • Rodrigo LOVATON DAVILA

    (Minnesota Population Center, University of Minnesota)

  • Aine Seitz MCCARTHY

    (Lewis & Clark College)

  • Dorothy GONDWE

    (Bayer U.S. LLC)

  • Phatta KIRDRUAND

    (Faculty of Economics, Thammasat University)

  • Uttan SHARMA

    (Institute for Social and Environmental Research)

Abstract

In this study, we produce a valid and consistent variable for socioeconomic status (SES) at the household level with census microdata from ten developing countries available from the Integrated Public Use Microdata Series—International (IPUMS-I), the world's largest census database. We use principal components analysis to compute a wealth index based on asset ownership, utilities, and dwelling characteristics. We validate the index by verifying socioeconomic gradients on school enrollment and educational attainment. Given that the availability of socioeconomic indicators varies considerably across samples of census microdata, we implement a stepwise elimination procedure on the wealth index to identify the conditions that produce an internally consistent index. Using the results of the stepwise methodology, we propose which indicators are most important in measuring household SES. The development of the asset index for such a large archive of international census microdata is a very useful public resource for researchers.

Suggested Citation

  • Rodrigo LOVATON DAVILA & Aine Seitz MCCARTHY & Dorothy GONDWE & Phatta KIRDRUAND & Uttan SHARMA, 2022. "Water, Walls, and Bicycles: Wealth Index Composition Using Census Microdata," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 88(1), pages 79-120, March.
    • Handle: RePEc:ctl:louvde:v:88:y:2022:i:1:p:79-120
    DOI: 10.1017/dem.2020.27
    as

    Download full text from publisher

    File URL: https://doi.org/10.1017/dem.2020.27
    Download Restriction: no
    File URL: https://libkey.io/10.1017/dem.2020.27?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Luc Christiaensen & Peter Lanjouw & Jill Luoto & David Stifel, 2012. "Small area estimation-based prediction methods to track poverty: validation and applications," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(2), pages 267-297, June.
    2. Elbers, Chris & Lanjouw, Jean O. & Lanjouw, Peter, 2002. "Micro-level estimation of welfare," Policy Research Working Paper Series 2911, The World Bank.
    3. Alessandro Tarozzi & Angus Deaton, 2009. "Using Census and Survey Data to Estimate Poverty and Inequality for Small Areas," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 773-792, November.
    4. Deon Filmer & Lant Pritchett, 1999. "The Effect of Household Wealth on Educational Attainment: Evidence from 35 Countries," Population and Development Review, The Population Council, Inc., vol. 25(1), pages 85-120, March.
    5. Alkire, Sabina & Foster, James, 2011. "Counting and multidimensional poverty measurement," Journal of Public Economics, Elsevier, vol. 95(7), pages 476-487.
    6. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, vol. 71(1), pages 355-364, January.
    7. Stanislav Kolenikov & Gustavo Angeles, 2009. "Socioeconomic Status Measurement With Discrete Proxy Variables: Is Principal Component Analysis A Reliable Answer?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 128-165, March.
    8. Adam Wagstaff & Naoko Watanabe, 2003. "What difference does the choice of SES make in health inequality measurement?," Health Economics, John Wiley & Sons, Ltd., vol. 12(10), pages 885-890, October.
    9. Mark Montgomery & Michele Gragnolati & Kathleen Burke & Edmundo Paredes, 2000. "Measuring living standards with proxy variables," Demography, Springer;Population Association of America (PAA), vol. 37(2), pages 155-174, May.
    10. Ragui Assaad & Deborah Levison & Nadia Zibani, 2010. "The Effect of Domestic Work on Girls' Schooling: Evidence from Egypt," Feminist Economics, Taylor & Francis Journals, vol. 16(1), pages 79-128.
    11. Deon Filmer & Kinnon Scott, 2012. "Assessing Asset Indices," Demography, Springer;Population Association of America (PAA), vol. 49(1), pages 359-392, February.
    12. David E. Sahn & David Stifel, 2003. "Exploring Alternative Measures of Welfare in the Absence of Expenditure Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(4), pages 463-489, December.
    13. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, March.
    14. David McKenzie, 2005. "Measuring inequality with asset indicators," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(2), pages 229-260, June.
    15. Magnus Lindelow, 2006. "Sometimes more equal than others: how health inequalities depend on the choice of welfare indicator," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 263-279, March.
    16. Milton Friedman, 1957. "The Permanent Income Hypothesis," NBER Chapters, in: A Theory of the Consumption Function, pages 20-37, National Bureau of Economic Research, Inc.
    17. Sahn, David E. & Stifel, David C., 2000. "Poverty Comparisons Over Time and Across Countries in Africa," World Development, Elsevier, vol. 28(12), pages 2123-2155, December.
    18. Deon Filmer & Lant Pritchett, 2001. "Estimating Wealth Effects Without Expenditure Data—Or Tears: An Application To Educational Enrollments In States Of India," Demography, Springer;Population Association of America (PAA), vol. 38(1), pages 115-132, February.
    19. Martin Wall & Deborah Johnston, 2008. "Counting Heads or Counting Televisions: Can Asset-based Measures of Welfare Assist Policy-makers in Russia?," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 9(1), pages 131-147.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Floyd Mwansa, 2023. "Measuring Distribution of Wealth in Zambia Using Census Micro Data: An Application of Principal Component Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 126-140, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Deon Filmer & Kinnon Scott, 2012. "Assessing Asset Indices," Demography, Springer;Population Association of America (PAA), vol. 49(1), pages 359-392, February.
    2. Permanyer, Iñaki, 2013. "Using Census Data to Explore the Spatial Distribution of Human Development," World Development, Elsevier, vol. 46(C), pages 1-13.
    3. Janina Isabel Steinert & Lucie Dale Cluver & G. J. Melendez-Torres & Sebastian Vollmer, 2018. "One Size Fits All? The Validity of a Composite Poverty Index Across Urban and Rural Households in South Africa," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 136(1), pages 51-72, February.
    4. Abderrahman Yassine & Fatima Bakass, 2022. "Do Education and Employment Play a Role in Youth’s Poverty Alleviation? Evidence from Morocco," Sustainability, MDPI, vol. 14(18), pages 1-25, September.
    5. Patrick Ward, 2014. "Measuring the Level and Inequality of Wealth: An Application to China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 613-635, December.
    6. Jeroen Smits & Roel Steendijk, 2015. "The International Wealth Index (IWI)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(1), pages 65-85, May.
    7. Hai‐Anh H. Dang, 2021. "To impute or not to impute, and how? A review of poverty‐estimation methods in the absence of consumption data," Development Policy Review, Overseas Development Institute, vol. 39(6), pages 1008-1030, November.
    8. Permanyer, Iñaki, 2014. "Assessing individuals' deprivation in a multidimensional framework," Journal of Development Economics, Elsevier, vol. 109(C), pages 1-16.
    9. Baris Ucar, 2015. "The Usability of Asset Index as an Indicator of Household Economic Status in Turkey: Comparison with Expenditure and Income Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(3), pages 745-760, April.
    10. Dang, Hai-Anh & Lanjouw, Peter F., 2021. "Data Scarcity and Poverty Measurement," IZA Discussion Papers 14631, Institute of Labor Economics (IZA).
    11. Luc Christiaensen & Peter Lanjouw & Jill Luoto & David Stifel, 2012. "Small area estimation-based prediction methods to track poverty: validation and applications," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(2), pages 267-297, June.
    12. Tanveer Ahmed Naveed & David Gordon & Sami Ullah & Mary Zhang, 2021. "The Construction of an Asset Index at Household Level and Measurement of Economic Disparities in Punjab (Pakistan) by using MICS-Micro Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(1), pages 73-95, May.
    13. Grimm, Michael & Harttgen, Kenneth & Klasen, Stephan & Misselhorn, Mark, 2008. "A Human Development Index by Income Groups," World Development, Elsevier, vol. 36(12), pages 2527-2546, December.
    14. Luisa Natali & Marta Moratti, 2012. "Measuring Household Welfare: Short versus long consumption modules," Papers inwopa671, Innocenti Working Papers.
    15. Olufunke Alaba & Lumbwe Chola, 2014. "Socioeconomic Inequalities in Adult Obesity Prevalence in South Africa: A Decomposition Analysis," IJERPH, MDPI, vol. 11(3), pages 1-20, March.
    16. Bérenger, Valérie & Deutsch, Joseph & Silber, Jacques, 2013. "Durable goods, access to services and the derivation of an asset index: Comparing two methodologies and three countries," Economic Modelling, Elsevier, vol. 35(C), pages 881-891.
    17. Francisco Ferreira & Jérémie Gignoux & Meltem Aran, 2011. "Measuring inequality of opportunity with imperfect data: the case of Turkey," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(4), pages 651-680, December.
    18. Kashi Kafle & Rui Benfica & Paul Winters, 2020. "Does relative deprivation induce migration? Evidence from Sub‐Saharan Africa," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(3), pages 999-1019, May.
    19. Kenneth Harttgen & Stephan Klasen & Sebastian Vollmer, 2013. "An African Growth Miracle? Or: What do Asset Indices Tell Us About Trends in Economic Performance?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59, pages 37-61, October.
    20. Harttgen, Kenneth & Klasen, Stephan, 2012. "A Household-Based Human Development Index," World Development, Elsevier, vol. 40(5), pages 878-899.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctl:louvde:v:88:y:2022:i:1:p:79-120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sebastien SCHILLINGS (email available below). General contact details of provider: https://edirc.repec.org/data/iruclbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.