The polychoric dual-componentm wealth index as an alternative to the DHS index: Addressing the urban bias

Abstract

The DHS wealth index − based on a statistical technique known as principal component analysis − is used extensively in mainstream surveys and epidemiological studies to assign individuals to wealth categories from information collected on common assets and household characteristics. Since its development in the late nineties, the index has established itself as a standard and, due to its ease of use, has led to a large and welcome increase in the analysis of inequalities. The index is, however, known to present some serious limitations, one being a bias towards patterns of urban wealth: the so-called “urban bias”.