A measure of poverty based on the rasch model

Abstract

Asking questions about income is often a hard task: nonresponse rates are high, and the reliability of the surveyed answers is sometimes poor. In this contribution we propose a measure of the economic status based on a set of wealth-related items. This measure is based on the Rasch model, which allows to estimate different relevance weights for each item: difficulty parameters indicate the severity of each of the situations described by the items, while ability parameters indicate poverty level of each unit. This poverty measure is computed on survey data collected on a sample of 2,465 households living in Veneto. Some analyses conducted on the estimated poverty measure indicate a good consistency with the expected relationships, and confirm the possibility to get this kind of estimates from indirect measures.