Only some questionnaires ask the reservation price-- the price at which that asset could be sold, given its current state of use, disrepair or improvement. Others ask the potential replacement price if a similar asset were to be purchased today. Some questionnaires ask both questions. The worst-case scenario is where the respondent is allowed to choose which method to use, but which method was chosen is not identified. Another problem is that sometimes the actual purchase price and the hypothetical replacement price are asked in the same column, conflating figures related to two different time periods; moreover, the year of the purchase of the asset is not always included. We can only speculate on whether asking the potential reservation versus replacement price would be the most accurate approach (although we favor the reservation price); surely these hypotheticals are culturally sensitive questions.

The standard practice of most surveys is to value assets at the prevailing average market value for a given region. This practice, however, has its pitfalls since it is difficult to take into account the quality of the asset in any but the most general terms (e.g., irrigated versus non-irrigated land). Hence, the need to fall back on the interviewee’s estimated reservation price or potential replacement price to take into account land quality and improvements or an accurate rendering of the value of a household’s animal stock or farm equipment. The worse practice, from our point of view, is asking a respondent what the average value of a given asset might be without any referent.<sup>21</sup> Many of the LSMS questionnaires also collect market data on assets bought or sold within the past twelve months. While important, this only provides data on a limited subset of assets owned by the household. Some surveys collect data on the monthly rental income from assets such as land, work animals, farm equipment or housing; many also ask for how much one could rent an asset or have to pay in rent, such as for housing. This information is potentially useful for calculating the incidence of asset ownership, but is of limited value in estimating wealth.

Relatively few of the LSMS questionnaires reviewed here asked the reservation or potential replacement price of the household’s dwelling. It was more common to ask the value of the monthly mortgage payment, which is also not a very good measure of housing wealth, particularly if not accompanied by the original purchase price, year of purchase, and length of mortgage. The inconsistencies characterizing the current valuation of assets at the household level make it difficult to use this data to estimate national or global distributions of wealth.

A major challenge in the collection of asset data is distinguishing between use rights versus ownership rights, particularly where property rights are complex. Collecting information on land ownership is particularly challenging, since as noted earlier, land tenure systems vary tremendously across countries and even within countries. What it means to “own” a plot of land, or a house, depends on the specific context. Land questions should, therefore, be context specific. Nonetheless, it is important to understand the claims that individuals and households have over the land and how secure these rights are. Thus, questions should include information on whether the land is owned, whether it is titled, and what rights the owner has over the land. A few LSMS questionnaires do this at the household level. For example, the 1998-99 Ghana questionnaire asks whether the land is titled and whether the owner can sell and/or use the land for security or collateral, which allows an analyst to test how the different forms of land tenure impact outcomes.

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