The Construction of an Asset Index Measuring Asset Accumulation in Ecuador

Abstract

Development economists have increasingly advocated using assets to complement income and consumption-based measures of welfare and wealth in developing countries, and thus to extend our understanding of the multi-dimensional character of poverty and the complexity of the processes underlying poverty reduction. The objective of this technical paper is to contribute to the debate about the measurement of assets, and the development of asset indices. It describes the particular methodology developed to construct an asset index based on a longitudinal panel data set from Guayaquil, Ecuador. It then outlines its application in terms of the different components of the asset index, before concluding by identifying several continuing methodological problems.