The asset debates: How (not) to use asset indices to measure well-being and the middle class in Africa

Asset indices are ubiquitous in the debate about well-being in African countries, not least because of the paucity of traditional household income and expenditure data. Indeed, asset data have fuelled the creation of a new, more optimistic picture of well-being in Africa, where both income and the middle class are growing fast. This is the first review of the use of asset indices for African countries. Readers are guided through key debates over the use of asset data, including the use of assets to measure trends over time as well as socio-economic status and class. We argue that the theoretical and empirical advantages of the asset index over traditional welfare measures are clear, but that caution is needed. Most asset indices show significant improvements in private wealth and social welfare in African countries due to increases in the number of household assets and improvements in health and education. However, we argue that simplistic conclusions in the economics literature about the growth of income or of a 'middle class' using asset indices are poorly founded.