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

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.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.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.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 recognis