Housing Index

The Housing Index uses the structure of the house, and sometimes the compound, to differentiate between economic levels of households and identify those who are poor. Because housing is generally the most important asset of households, and because people generally invest a lot in their houses, the building itself represents an extremely visible reflection of household wealth. The size of the house and compound, the material used for building the house, the number of rooms, the presence of running water and bathroom facilities, all taken together provide very strong impressionistic evidence of household economic levels. The housing index (best standardized by CASHPOR) and variations used by MFIs use these features to determine who is poor and who is better off.

This is an example of a house of a nonpoor family.

This is an example of a house of a poor family.

How Does Targeting Work

Field staff systematically walk through villages or sections of villages looking at each house, eliminating those that are obviously expensive and well built. The others are scored according to size; construction materials for walls, floor, and roof; and sometimes other variables, such as water supply, toilets, access to electricity, etc. Scores for each indicator are then added to create a composite score. Cut-off scores are established to include households considered poor and exclude those that are well off.

Constructing the Housing Index

CASHPOR is a pioneer in developing the Housing Index. It created a composite index known as the CASHPOR House Index using the size of the house, its structural condition, the quality of walls, and the quality of the roof. It scores houses based on:

A cut-off score of total points is established to separate the houses of the poor from those of the nonpoor. The index is context specific, and CASHPOR has refined its index for adaptation to different regions.

The characteristics MFIs consider to create their housing indices can be quite minimum to being relatively extensive. TSPI in the Philippines has a fairly simple housing index. It scores houses based on:

SHARE in India, on the other hand, brings into account extensive housing characteristics in computing the housing index. It scores houses based on:

As with the CASHPOR housing index, a cut-off score of total points is established to separate the houses of the poor from those of the non-poor. In the case of TSPI, an individual with a score below 4.5 is eligible for a loan (although adjustments to that cut-off point are made based on locality). Individuals with scores of more than 20 are considered ineligible for SHARE loans; those with scores below 20 are interviewed further to assess their eligibility.

Related Literature

Cost-effective Targeting: Two Tools to Identify the Poor ()
Gibbons, D.S.; Simanowitz, A.; Nkuna, B./Sembilan, Malaysia, and Tzaneen, South Africa: CASHPOR/SEF 1999

Overcoming the Obstacles of Identifying the Poorest Families: Using participatory wealth ranking (PWR), the CASHPOR House Index (CHI), and other measurements to identify and encourage the participation of the poorest families, especially the women of those families ()
Simanowitz, A.; Nkuna, B.; Kasim, S.; Gailey, Robert / Microcredit Summit 2000