Measuring inequality with asset indicators

This paper examines whether, in the absence of information on household income or consumption, data on household infrastructure, building materials, and ownership of certain durable assets can be used to measure inequality in living standards. Principal components analysis is used to obtain a relative measure of inequality, and a bootstrap prediction method is provided for use when auxiliary surveys are available. Mexican data is used to show that the inequality methods provided do provide reasonable proxies for inequalities in living standards. An application finds that after controlling for household income and demographics, school attendance of boys in Mexico is negatively related to state-level inequality.