Estimating Wealth Effects without Expenditure Data— or Tears

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Estimating Wealth Effects without Expenditure Data— or Tears (1998)

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by Deon Filmer , Lant Pritchett

Venue:	Policy Research Working Paper 1980, The World
Citations:	869 - 16 self

BibTeX

@INPROCEEDINGS{Filmer98estimatingwealth,
    author = {Deon Filmer and Lant Pritchett},
    title = {Estimating Wealth Effects without Expenditure Data— or Tears},
    booktitle = {Policy Research Working Paper 1980, The World},
    year = {1998}
}

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Abstract

Abstract: We use the National Family Health Survey (NFHS) data collected in Indian states in 1992 and 1993 to estimate the relationship between household wealth and the probability a child (aged 6 to 14) is enrolled in school. A methodological difficulty to overcome is that the NFHS, modeled closely on the Demographic and Health Surveys (DHS), measures neither household income nor consumption expenditures. As a proxy for long-run household wealth we construct a linear index from a set of asset indicators using principal components analysis to derive the weights. This “asset index ” is robust, produces internally coherent results, and provides a close correspondence with State Domestic Product (SDP) and poverty rates data. We validate the asset index using data from Indonesia, Pakistan and Nepal which contain data on both consumption expenditures and asset ownership. The asset index has reasonable coherence with current consumption expenditures and most importantly, works as well, or better, than traditional expenditure based measures in predicting enrollment status. When the asset index is applied to the Indian data the results show large, and variable, wealth gaps in the enrollment of children across states of India. While on average across India a rich (top 20 percent of the asset index) child is 31 percentage points more likely to be enrolled than a poor child (bottom 40 percent), this wealth gap varies from only 4.6 in Kerala, to 38.2 in Uttar Pradesh and 42.6 percentage points in Bihar. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent. Estimating Wealth Effects without Expenditure Data-- or Tears: An Application to Educational Enrollments in States of India 1

Keyphrases

asset index wealth effect expenditure data consumption expenditure percentage point wealth gap varies educational enrollment household income health survey wealth gap close correspondence reasonable coherence executive director world bank coherent result asset ownership national family health survey poor child indian data enrollment status uttar pradesh traditional expenditure household wealth principal component analysis methodological difficulty linear index poverty rate data current consumption expenditure indian state long-run household wealth state domestic product asset indicator

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