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# st: Constructing an Asset Index in Stata‹Discrepancy between predict command and hand calculations

 From Jennnifer Callaghan <[email protected]> To "[email protected]" <[email protected]> Subject st: Constructing an Asset Index in Stata‹Discrepancy between predict command and hand calculations Date Mon, 3 Jan 2011 13:24:55 -0500

```Hello and Happy New Year,

I am trying to find out what calculations Stata uses to calculate an asset
index using the predict command.  I am following the commands given by the
World Bank ( in the book Analyzing Health Equity Using Household Survey
Data, by O'Donnell, Van Doorsslaer, Wagstaff, and Lindelöw) and I am using
the following commands:

factor \$assets if rural==1, pcf factors(1)
predict asset_index if rural==1
sum asset_index
xtile quintile=asset_index if rural==1 [aw=hhweight], nq(5)

I am developing the asset index using MICS household survey data to apply to
a client exit interview where asset data was collected.  The problem that I
am running into is that when I calculate the asset score for a household by
hand I get different maximum and minimum asset scores than what stata
provides.  I am using the formula provided in the WB bank, to sum the scores
for each asset for each household.  The score for an asset when it is
present is equal to 1 minus the mean, divided by the SD, times the factor
loading.  The score when the asset is absent is equal to 0 minus the mean,

Can anyone tell me if stata uses the same formula or if it adjusts the
formula when predicting an asset index?  I am trying to figure out why I get
VERY different scores from the hand calculation.

Thank you very much in advance!

Jennifer

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