Issues in the construction of wealth indices for the measurement of socio-economic position in low-income countries

Emerging Themes in BioMed Central Open Access Analytic perspective Issues in the construction of wealth indices for the measurement of socio-economic position in low-income countries Laura D Howe*, James R Hargreaves and Sharon RA Huttly Address: Department of Epidemiology and Population Health, London School of Hygiene & Tropical Medicine, London, UK Email: Laura D Howe* - ; James R Hargreaves - ; Sharon RA Huttly - * Corresponding author Published: 30 January 2008 Emerging Themes in Epidemiology 2008, 5:3 doi:10.1186/1742-7622-5-3 Received: 30 July 2007 Accepted: 30 January 2008 This article is available from: http://www.ete-online.com/content/5/1/3 © 2008 Howe et al; licensee BioMed Central Ltd. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. Abstract Background: Epidemiological studies often require measures of socio-economic position (SEP). The application of principal components analysis (PCA) to data on asset-ownership is one popular approach to household SEP measurement. Proponents suggest that the approach provides a rational method for weighting asset data in a single indicator, captures the most important aspect of SEP for health studies, and is based on data that are readily available and/or simple to collect. However, the use of PCA on asset data may not be the best approach to SEP measurement. There remains concern that this approach can obscure the meaning of the final index and is statistically inappropriate for use with discrete data. In addition, the choice of assets to include and the level of agreement between wealth indices and more conventional measures of SEP such as consumption expenditure remain unclear. We discuss these issues, illustrating our examples with data from the Malawi Integrated Household Survey 2004–5. Methods: Wealth indices were constructed using the assets on which data are collected within Demographic and Health Surveys. Indices were constructed using five weighting methods: PCA, PCA using dichotomised versions of categorical variables, equal weights, weights equal to the inverse of the proportion of households owning the item, and Multiple Correspondence Analysis. Agreement between indices was assessed. Indices were compared with per capita consumption expenditure, and the difference in agreement assessed when different methods were used to adjust consumption expenditure for household size and composition. Results: All indices demonstrated similarly modest agreement with consumption expenditure. The indices constructed using dichotomised data showed strong agreement with each other, as did the indices constructed using categorical data. Agreement was lower between indices using data coded in different ways. The level of agreement between wealth indices and consumption expenditure did not differ when different consumption equivalence scales were applied. Conclusion: This study questions the appropriateness of wealth indices as proxies for consumption expenditure. The choice of data included had a greater influence on the wealth index than the method used to weight the data. Despite the limitations of PCA, alternative methods also all had disadvantages. Page 1 of 14 (page number not for citation purposes) Emerging Themes in Epidemiology 2008, 5:3 Introduction Defining and measuring socio-economic position Socio-economic position (SEP) is a concept widely used in epidemiological research. Definitions vary, but commonly incorporate physical resources, social resources, and status within a social hierarchy[1]. Measurement of SEP is crucial not only for studies focusing on the social determinants of health, but also for the vast majority of observational health research, since SEP is likely to confound many relationships. Traditionally, indicators of SEP have tended to be monetary measures such as income or consumption expenditure, based on the assumption that material living standards largely determine well-being[2]. Whilst it is now widely recognised that monetary measures of SEP fail to capture all of the diverse aspects of well-being, their use remains widespread, partially due to difficulties in measuring more complex conceptualisations of SEP, and because monetary measures may have clearer policy implications. There is longstanding debate about whether income or consumption expenditure is a better measure of SEP. Income is generally more variable than consumption; Friedman's permanent income hypothesis states that households are likely to base their consumption decisions on more than just their current income – people tend to 'smooth' their consumption in times of income fluctuation, for example by borrowing or drawing on savings in times of low income[3]. It is therefore widely asserted that consumption expenditure is a better marker of long-term SEP than income. This argument holds particularly strongly in low-income countries, where income may come from a variety of sources and may vary dramatically across seasons. Longer-term aspects of SEP are thought to be most relevant to many health outcomes, adding to the reasons for choosing consumption expenditure over income. In low-income countries, measurement of consumption expenditure is fraught with difficulties. There are problems with recall and reluctance to divulge information. Additionally, prices are likely to differ substantially across times and areas, necessitating complex adjustment of expenditure figures to reflect these price differences[4]. Furthermore, collecting consumption expenditure data requires lengthy questionnaires that must be completed by skilled and trained interviewers. There are therefore both reliability and cost/time reasons why epidemiologists conducting health research in low-income countries may wish to use an alternative measure of SEP. Additionally there are existing datasets rich in health data, such as the Demographic and Health Surveys (DHS), which lack information on income or consumption expenditure. http://www.ete-online.com/content/5/1/3 The asset-based approach to measuring socio-economic position An asset-based approach to measuring household SEP is one alternative to income and consumption expenditure. This approach has arisen from demographic studies such as the DHS, which although lacking data on income or consumption expenditure, collect information on ownership of a range of durable assets (e.g. car, refrigerator, television), housing characteristics (e.g. material of dwelling floor and roof, toilet facilities), and access to basic services (e.g. electricity supply, source of drinking water). These items were all originally included in the surveys for their direct influences on health; for instance, television and radio ownership was of interest to identify households receiving public health (...truncated)