Capturing Household Transitory Wealth through an Index on Expenditures and Non-Durables: Insights from Six Peri-Urban African Settings

Julia Driessen, University of Pittsburgh
Olasupo P. Ogunjuyigbe, Obafemi Awolowo University
Abimbola S. Phillips, Obafemi Awolowo University Teaching Hospital Complex (OAUTHC)
Qingfeng Li, Johns Hopkins University
Adesegun O. Fatusi, Obafemi Awolowo University
Amy Tsui, Johns Hopkins University

We are interested in exploring how family building affects wealth using the Family Health and Wealth Study, which collected household data from six peri-urban sites in Africa. While considered a less sensitive predictor of fertility than permanent wealth, transitory wealth is likely a more sensitive outcome when trying to measure the effect of fertility on economic well-being. We constructed an index capturing transitory wealth and examined the ability of this index to explain economic well-being alongside and independently from the classic asset index for permanent wealth. This middle class index included expenditures and non-durables ownership. Regressions of self-reported economic indicators on the two indices generated support for their ability to jointly and significantly capture wealth. These findings suggest that the middle class index is a viable representation of transitory wealth, avoiding the well-known issues of using direct expenditures while explaining economic status independent of permanent wealth.