Durable goods, access to services and the derivation of an asset index: Comparing two methodologies and three countries

Abstract

This paper compares two approaches to the derivation of asset indices in order to derive measures of multidimensional poverty. The first one assumes that there exists an order of acquisition of durable goods and access to services. The second one applies correspondence analysis to the same data and uses the first factor to evaluate the extent of poverty. While these two methodologies provide a ranking of the households according to their long-run economic status, they correspond to two different ways of using and summarizing the information provided by the observed indicators of the households' living conditions. The empirical investigation covers three countries, Egypt, Morocco and Turkey, and is based on the Demographic and Health Surveys. The application of these two methodologies, separately for the whole sample and for urban and rural areas, gives interesting results that show important differences within and between countries. These results seem to indicate that the order of acquisition approach and correspondence analysis provide complementary and useful information on the extent of the deprivation experienced by households in these three countries.