Central Data Catalog

Citation Information

Type Working Paper
Title Water, Walls and Bicycles: Wealth Index Composition Using Census Microdata
Publication (Day/Month/Year) 2014
URL https://pop.umn.edu/sites/pop.umn.edu/files/wp-2014-7.pdf
This research aims to develop a valid and consistent measure for socioeconomic status at the household
level using census microdata from 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. The validation strategies include comparing our proposed index with the widely used
Demographic and Health Survey (DHS) wealth indices and verifying socioeconomic gradients on school
enrollment and educational attainment. Graphical analysis of kernel distributions suggests that our
measure is valid. Results also show a consistently positive effect of the wealth index on education
outcomes. Furthermore, using a stepwise elimination procedure, we identify conditions to produce an
internally consistent asset index given that the availability of indicators varies considerably for census
microdata. As an important practical implication of results, the proposed methodology suggests which
assets are more important in determining household socioeconomic status

Related studies