Evaluating the Performance of Five Asset-based Wealth Indices in Predicting Socioeconomic Position in Rural Bangladesh

Abstract

Social scientists have developed numerous asset-based wealth indices to assess and target socioeconomic inequalities globally. However, there are no systematic studies of the relative performance of these different measures as proxies for socioeconomic position. In this study, we compare how five asset-based wealth indices—the International Wealth Index (IWI), the Standard of Living portion of the Multi-Dimensional Poverty Index (MPI-SL), the Poverty Probability Index (PPI), the Absolute Wealth Estimate (AWE), and the DHS Wealth Index (DHS)—predict benchmarks of socioeconomic position across 11 communities in rural Bangladesh. All indices were highly correlated. The IWI best explained variation in individual and community ranking of economic well-being, while the PPI best explained variation both between and within communities for total household wealth and a general measure of subjective social status.

Starting from scratch in a patrilocal society: how women build networks after marriage in rural Bangladesh

“…Rural and peri-urban households are usually dispersed across rice fields, orchards, bamboo stands and ponds in nucleated clusters of neighbouring households (50-200 households) called para in Bangla and Hajong (tola in Santali and shong in Mandi). We refer to these settlements as villages, as they provide an important nexus for social interaction, common production activity and mutual aid [25][26][27][28].…”

The measurement of asset and wealth poverty

“…Thus, for instance, Sahn and Stifel (2000) applied stochastic dominance techniques to evaluate changes in the distribution of an asset index constructed using indicators of ownership of consumer durables and other household characteristics to evaluate poverty trends in 12 African countries in the 1980s and 1990s. In a recent contribution, Woolard et al (2021) evaluated the performance of a battery of asset indices in Bangladesh. Results from that analysis show asset indices strongly correlate with various benchmarks of socioeconomic well-being and account for large part of the variation in household wealth within and between communities suggesting asset indices can be a valuable tool for performing welfare and poverty analyses.…”

Assessing comparative asset-based measures of material wealth as predictors of physical growth and mortality

“…It also serves as one key component of holistic measures of well-being such as the MPI ( Alkire & Jahan, 2018 ). In low- and middle-income settings, measures of asset-based material wealth are particularly useful for reasons of cost, reliability, validity and stability ( Howe et al, 2012 ; Jerven, 2013 ; Kaiser et al, 2017 ; Woolard et al, 2021 ). Thus, in these settings, researchers across a range of social sciences increasingly rely on asset-based indices of material wealth using ownership of durable goods, land, livestock, and access to basic services ( Filmer & Pritchett, 2001 ; Howe et al, 2012 ; Hruschka et al, 2015 ; Rutstein et al, 2004 ; Rutstein & Staveteig, 2014 ; Smits & Steendijk, 2015 ; Woolard et al, 2021 ).…”