Counting Heads or Counting Televisions: Can Asset-based Measures of Welfare Assist Policy-makers in Russia?

There has been a vigorous debate about poverty measurement in Russia, where both the poverty line and poverty data have been subject to criticism. We outline some of the issues raised and discuss the use of an alternative welfare measure based on household assets. Asset indices have mostly been constructed for low-income countries, supported by two arguments: first, the asset index appears to have a number of empirical advantages in terms of data collection; and second, it may be better at capturing long-term welfare than either income or expenditure data. We show that the asset index approach is useful in Russia, and may present policy-makers with a superior means of determining household welfare. However, our discussion raises a number of methodological issues that must be confronted by those constructing asset indices.