Income and Assets as Impact Indicators

Addresses income and assets as impact variables in the assessment of microfinance programs. Argues that if both variables are analysed within the context of a household economic portfolio model, then they are valid indicators for tracking changes in household and enterprise welfare.

Several key issues surrounding the use of income and/or assets as impact variables are presented. These include income diversification, intrahousehold income and asset control, fungibility and problems of attribution, seasonality, valuing assets and liabilities, and measurements of net versus gross incomes.

Highlights practical solutions for measuring income - and asset - related variables. Concludes that:

• Impact assessment should combine elements of 'low' and 'middle' approaches to data collection;
• The middle approach includes a reasonable amount of impact variables to test hypotheses related to the impacts of microenterprise programmes, focuses as much on expenditures as it does on incomes and assets, and requires interviews with only one household member;
• Reliability of data is increased using a middle approach over a low approach, and information of sufficient precision is collected without the costs of panel ('high') research.

[Adapted from author's abstract]