| Re: How wealth indices align with income and consumption measures [message #31478 is a reply to message #31402] |
Fri, 03 October 2025 12:26  |
Yiqun Luan
Messages: 4
Registered: February 2021
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Hello, I am not a DHS team member but a DHS data user.
My understanding is that the wealth indices are derived from a method called Principal Factor Analysis, which is a calculation based on what assets a household has. Such as whether the household has a designated place for handwashing, what material the walls or ceiling are made of, etc. The status of asset possession among households can be obtained through either the interviewer's observation or the respondents' responses. If I remember correctly, the DHS does not collect income and consumption data. The Living Standards Measurement Survey from the World Bank has modules that collect income and consumption data. These two types of measures, asset-based and income-and-consumption-based, have their own advantages and disadvantages. For example, respondents might overstate or understate their income/consumption, whereas the observation of asset possession is a more objective measure. However, on the contrary, the possession of assets may not be a reliable proxy for large temporary income or may not accurately reflect the current market value of assets.
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