This paper aims at assessing poverty in Albania through the use of an asset index whose effectiveness is compared with consumption in explaining differences in results of health and educational outcomes.
Firstly, an asset index is constructed by the use of factor analysis and principal component techniques; then, two probit models are estimated assessing enrolment rate for secondary education and chronic disability in Albania using the asset index as an independent variable to compare its effectiveness with expenditures. The World Bank LSMS Survey of 2002 is used in the analysis.