The Usability of Asset Index as an Indicator of Household Economic Status in Turkey: Comparison with Expenditure and Income Data

Information on expenditure and income are the most widely used tolls for differentiating economic status of households. In many surveys it’s hard to compile data on expenditure and income. In such cases questioning the availability of household amenities would serve as a tool for constructing an asset index and thus differentiating economic status of households. This study is conducted to see the extent of compatibility of an asset index with expenditure and income which serve as a tool for differentiating economic status of households. The data source used in the study is the 2012 Turkish Statistical Institute Household Budget Survey. This survey has the property to be the only survey which encompasses all the three variables in Turkey. An asset index was constructed by using Principal Components Analysis and comparisons were made among the indicators. This study showed that asset index quite well overlaps expenditure and income quintiles at the lowest and highest quintiles. More than 60 % of those in the lowest expenditure quintile are also in the lowest asset index quintile. Overlapping is much less for the quintiles in between. The results don’t indicate whether asset index or other indicators are differentiating economic status of households better. In either case asset index can be considered to be an efficient tool for differentiating the lowest quintile. Pearson’s correlation coefficient analyses were conducted among the indicators. The coefficient is 0.75 between expenditure and income quintiles. It is 0.64 between asset index and expenditure quintiles and 0.63 between asset index and income quintiles. These values imply that the relationship between asset index, expenditure and income quintiles can be regarded to be quite high.