Construction of a wealth index using Principal Components Analysis

Abstract

The measurement of wealth is a matter of study of Econometrics, within this discipline there are various proposals for the construction of the wealth index. In this work a review is made on the construction method from the income approach, using proxy variables and applying the statistical technique of principal components. At the end of the article, an illustration of this methodology is made using the data from the ENSANUT National Health and Nutrition Survey of 2018 conducted for the Ecuadorian population by the National Institute of Statistics and Censuses – INEC.