The wealth index as a measure of socio-economic position

Background The wealth index is a commonly-used measure of socio-economic position (SEP) in low- and middle-income countries. The approach arose from Demographic and Health Surveys (DHS) where few other options for SEP-measurement are available. Despite many unanswered questions the wealth index approach, and the methods of wealth index construction used by the DHS, have been widely-adopted by the epidemiological community. This thesis explores the appropriateness of the wealth index as a measure of SEP, using data from the Malawi Integrated Household Survey 2004/5 (IHS2) and Brazil DHS 1996. Main findings 1) The wealth index and consumption expenditure Some proponents of the wealth index claim it to be a reliable and rational proxy for consumption expenditure; a systematic review of the literature demonstrated this to be an unreasonable assumption. Analyses of IHS2 data showed that the agreement of the wealth index with consumption expenditure is largely unaffected by alternative equivalence scales for adjusting consumption expenditure for household size and composition, or by the range of items included in the consumption expenditure aggregate. 2) Are the methods of wealth index construction used by the DHS the most appropriate? The DHS use principal components analysis (PCA) to weight the indicators in a wealth index; issues in the use of PCA were considered and alternative weighting methods explored. When nominal or ordered categorical indicators are used, alternatives to PCA are considered preferable. A single wealth index is often constructed for urban and rural areas together; generating separate indices for each area had little effect on the final index. Agreement with consumption expenditure was lower in rural areas; various approaches to wealth index construction did not alter this. Expanding the range and number of indicators used by DHS wealth indices did not increase agreement with consumption expenditure, but it did reduce 2 the observed urban-rural differences and enhance the ability of the wealth index to differentiate between rural households. 3) What socio-economic processes contribute to the wealth index hierarchy? A key issue for any measure of SEP is its conceptual clarity; analyses of the IHS2 data demonstrate that the socio-economic processes leading to a wealth index hierarchy remain largely unknown, although both household- and community-level factors play a role. 4) Alternatives to the wealth index Potential alternatives to the wea