Wealth is a categorization used in most studies and societies to assess the relative socioeconomic status of an individual or household in a given setting, context and/or community. Wealth ranking is a participatory exercise where key informants rank households in the community according to their evaluation of each household’s resources. The ranking provided from this exercise is like a weighted average of the household’s resources and it is important to note that higher weights are implicitly given to resources considered socially more important by the key informant (Kebede, 2009).
An asset index is a proxy measure for the economic wellbeing of a household (Sahn and Stifel, 2003). In cases where consumption and expenditure data are not available, an asset index is often used (Filmer and Pritchett 2001; Carter and Barrett 2006). This approach is argued to be a better measure than consumption or income since it is more stable over time (Carter and Barrett, 2006; Michelson et al., 2013). It provides a relative measure of poverty for each household and may be used to complement consumption-based poverty measures.
Poverty rates have been used for over the past half century to provide a monetary measure of household income relative to meeting the household’s basic needs. An international poverty line is set by the World Bank and is used to calculate the number of persons that fall below or above this measure. The World Bank has defined extreme poverty as living below $1.25 (PPP) per day. Rather than income, poverty rate is mainly calculated in developing countries using consumption expenditure to obtain a wealth status of a given (Deaton, 1997).
