EquityTool: Released: January 10, 2025

Source data: Lesotho DHS 2023-24

# of survey questions in original wealth index: 48

# of variables in original index: 172

# of survey questions in EquityTool: 13

# of variables in EquityTool: 13

Questions:

Technical notes:

The standard simplification process was applied to achieve high agreement with the original wealth index. Kappa was greater than 0.75 for the national and urban indices. However, after completing the standard simplification process, an additional variable was added to improve the indices’ ability to discriminate between the first and second wealth quintiles. Details on the standard process can be found in this article. The data used to identify important variables comes from the factor weights released by ICF.

Level of agreement:

Respondents in the original dataset were divided into three groups for analysis – those in the 1^st and 2^ndquintiles (poorest 40%), those in the 3^rd quintile, and those in the 4^th and 5^th quintiles (richest 40%). After calculating their wealth using the simplified index, they were again divided into the same three groups for analysis against the original data in the full DHS. Agreement between the original data and our simplified index is presented above.

What does this mean?

When shortening and simplifying the index to make it easier for programs to use to assess equity, it no longer matches the original index with 100% accuracy. At an aggregate level, this error is minimal, and this methodology was deemed acceptable for programmatic use by an expert panel. However, for any given individual, especially those already at a boundary between two quintiles, the quintile the EquityTool assigns them to may differ to their quintile according to the original DHS wealth index.

The graph below illustrates the difference between the EquityTool generated index and the full DHS wealth index. Among all of those people (20% of the population) originally identified as being in the poorest quintile, approximately 75% are still identified as being in the poorest quintile when we use the simplified index.  However, approximately 24% of people are now classified as being in Quintile 2.  From a practical standpoint, all of these people are relatively poor. Yet, it is worthwhile to understand that the simplified index of 13 questions produces results that are not identical to using all 48 questions in the original survey.

The following table provides the same information on the movement between national quintiles when using the EquityTool versus the original DHS wealth index:

The following graph provides information on the movement between urban quintiles when using the EquityTool versus the original DHS wealth index:

The following table provides the same information on the movement between urban quintiles when using the EquityTool versus the original DHS wealth index:

Data interpretation considerations:

1. This tool provides information on relative wealth – ‘ranking’ respondents within the national or urban population. The most recent available data from the WorldBank indicates that 32.4% of people in Lesotho live below $2.15/day[1]. This information can be used to put relative wealth into context.
2. People who live in urban areas are more likely to be wealthy. In 2023, 41% of people living in urban areas are in the richest national quintile, compared to only 7% of those living in rural areas[2].
   
   1. If your population of interest is predominantly urban, we recommend you look at the urban results to understand how relatively wealthy or poor they are, in comparison to other urban dwellers.
   2. If the people you interviewed using the EquityTool live in rural areas, or a mix of urban and rural areas, we recommend using the national results to understand how relatively wealthy or poor they are, in comparison to the whole country.
3. Some districts in Lesotho are wealthier than others. It is important to understand the country context when interpreting your results.
4. In most cases, your population of interest is not expected to be equally distributed across the five wealth quintiles. For example, if your survey interviewed people exiting a shopping mall, you would probably expect most of them to be relatively wealthy.

Metrics for Management provides technical assistance services to those using the EquityTool, or wanting to collect data on the wealth of their program beneficiaries. Please contact support@equitytool.org and we will assist you.

[1] From pip.worldbank.org, reporting Poverty headcount ratio at $2.15/day at 2017 international prices.

[2] From the Lesotho 2023-24 DHS dataset household recode, available at http://dhsprogram.com/