Wealth Index (DHS)

[Kanika Dua]

Hello,

I working on the DHS dataset for India, and have a few doubts regarding the wealth index. I see that the DHS data already includes the wealth index, but I am confused about the following points:

1. I have come across a few papers which use the DHS dataset, and construct their own wealth index instead of using the one already given in the DHS dataset. Often, there is not much explanation on why and how they construct a new index. I can guess that this may be because the newly constructed index is more suited to their specific analysis. I was wondering if there are any papers that guide on when and when not to construct a new wealth index or use the one given in the DHS dataset.

2. The DHS dataset consists of many types of wealth indices. If at all one plans on using the wealth index given in the DHS index- how should one decide on going about which wealth index among the plethora given in the dataset to use? (wealth index combined, wealth index factor score combined (5 decimals), wealth index for rural/urban, wealth index factor score for urban/rural combined (5 decimals), wealth index within state, wealth index factor score within state (5 decimals), wealth-index urban within state, wealth index factors score (5 decimals)-urban, wealth-index rural within state, wealth index factors score (5 decimals)-rural)

Is there a guiding paper on the same?

I would be grateful for any guidance on the above.

Thank you,
Kanika

[Tarun Choudhary]

I am not sure regarding the first question as the only variation is in the variables that you will use to construct your index. DHS program website has a detailed guide on construction of the index and you can tweak the same to construct your own after excluding or including additional variables.

For the second question you can choose the one to use based on the unit of analysis. If you want to analyse at national level use the national one, if it's state level use the state one and so on. For e.g. if you want to generate estimates for rural areas in Uttar Pradesh you should use the wealth inded rural for UP

[Kanika Dua]

Thank you, Tarun!