FAQ

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ASSET TO INCOME ESTIMATOR

FREQUENTLY ASKED QUESTIONS

WHAT IS THE DIFFERENCE BETWEEN RELATIVE AND ABSOLUTE WEALTH?

What does being in the poorest quintile mean in terms of absolute wealth, or income, for households in Tanzania vs households in Mozambique? That question cannot be answered if the only information available is relative wealth.

Relative wealth allows for an assessment of wealth in relation to others in the country or population of interest. It is commonly used in public health, through the creation of an asset-based wealth index, looking at the things a person owns or attributes of their residence. Using statistical methods, we can divide the population into five quintiles and show which households are more or less poor.

Absolute wealth provides a real dollar value for an individual or household’s income. When income is not reliable or able to be collected, researchers then collect information on consumption and expenditures. These data are expensive and time consuming to collect and analyze, but are required to determine who falls below various poverty lines.

The A2IE provides an estimate of income for an individual or a household without having to collect this consumption or expenditure data. It allows you to estimate income, in real dollar values, even if you only have data on relative wealth such as from an asset-based wealth index or even simply the wealth quintile.

SHOULD I LOOK AT THE ANNUAL, MONTHLY, OR DAILY INCOME ESTIMATE?

This depends on the unit of time that would be most useful for you and your program. For example, the international poverty line is $2.15 per day. If you would like to compare individuals to this threshold, then using the daily estimate would be the most appropriate. If your program is trying to target households making less than $10,000 per year, then using the annual estimate would be best.

WHY ARE THESE ONLY ESTIMATES OF INCOME?

The process by which the estimates are determined is based on household survey data of income or consumption. Consumption is not an exact measure of income, but is widely used in household surveys and is the best available measure.

The estimates should be used with caution. We believe they are a good source of contextual information and may be used to make policy and group level decisions. We do not endorse the use of these estimates for means testing individuals or households.

HOW ACCURATE ARE THE INCOME ESTIMATES?

We compared our estimates to the World Bank’s poverty head count ratio, which estimates the proportion of individuals living on less than $2.15 per day in a given country. Over 50% of our estimates are within 2 percentage points of the World Bank poverty headcount ratio, and over 90% are within 5 percentage points (see Methodology for more details).

HOW DID YOU ESTIMATE HOUSEHOLD INCOME FROM INDIVIDUAL INCOME?

When the asset index distribution was created from the Demographic and Health Survey (DHS) or Multiple Indicator Cluster Survey (MICS), we also calculated the average number of “de jure” household members (the usual number of household members) in each percentile. Once the individual income distribution was created, the individual income estimate was then multiplied by the average number of de jure household members in each percentile to create a household estimate.

WHY CAN’T I ESTIMATE THE INCOME FOR SOMEONE IN THE BOTTOM 5% OF THE RELATIVE WEALTH DISTRIBUTION?

Wealth quintiles are the most commonly used measure of relative wealth in international development, which is why they were used for the A2IE. If you have a specific need for a different relative wealth quantile (e.g. deciles or percentiles), please contact us at m4madmin@m4mgmt.org.

HOW IS THE A2IE RELATED TO THE EQUITYTOOL?

The A2IE complements the EquityTool. They are both useful for managers, researchers and advocates interested in understanding equity in their programs or studies. While the EquityTool provides a simple, valid, and easy-to-use tool to measure relative wealth, the A2IE provides information on estimated income, an absolute measure. Relative wealth measures can be useful when trying to understand the socioeconomic status of an individual or household compared to others in the same country or population. Absolute measures can be useful when trying to compare individuals or households across countries.

I HAVE INCOME DATA ON PROGRAM PARTICIPANTS. CAN I USE THE A2IE TO CONVERT IT INTO RELATIVE WEALTH MEASURES (QUINTILES)?

If you have income data, yes, you can use the A2IE to convert to quintiles, but this conversion would also be an estimation. Since quintiles are typically based on asset ownership, income can only provide an estimate that should be used with caution.

A2IE Related Resources