Measuring Socio-economic Status in the Millennium Villages: The Role of Asset Index Choice

How are poverty analyses and poverty traps assessments affected by the choice among conventional methods of asset index construction? To address this question, this article uses panel data from four sites in the Millennium Villages Project (MVP) in Malawi, Tanzania, Mali and Ghana to study the relationship between eight asset indices and the sensitivity of findings related to poverty rates, poverty transitions and poverty traps to the index used. We find that although estimations of poverty rates and transitions are largely consistent across indices, evidence of poverty traps can be conditional on which asset index is used. The asset indices studied include structural income, principal components, factor analysis and a reduced set of assets reflecting the portfolio assessed in the Demographic Health Survey (DHS) data.