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MUMBAI. MAY 3, 2011



 SOCIO-ECONOMIC CLASSIFICATION-2011

 The New SEC system




THE NEW SEC SYSTEM
What is the
                     new SEC system?              01

                     How do we classify
                     a household
                     in the new SEC system?       02

                     What are the
                     advantages/ drawbacks
                     of the new SEC system?       03

                     How was the new SEC system
                     created?                     04

                     What are the
                     other systems
                     that we considered?          05

                     What is
                     the performance
                     of the new SEC system?       06


                     Conclusion                   07
THE NEW SEC SYSTEM
01

    What is the new
    SEC system?




3   THE NEW SEC SYSTEM
THE NEW SEC SYSTEM


         The new SEC system is used to classify households in India.
         It’s based on two variables:
            • Education of chief earner
            • Number of “consumer durables” ( from a predefined
               list)- owned by the family. The list has 11 items,
               ranging from ‘electricity connection’ and ‘agricultural
               land’- to cars and air conditioners


         We have 12 grades in the new SEC system, ranging from A1
         to E3

4   THE NEW SEC SYSTEM
DISTRIBUTION OF HOUSEHOLDS
India ( urban + rural )

     New SEC System


                                                                            18.4
                                                                     14.7              15.4

                                                             11.4
                                                                                                   9.7
                                             7.5     7.9
                                     5.3
                             4.3
                      3.2
             1.8
       0.4

       A1    A2       A3     B1      B2      C1      C2      D1      D2      E1         E2         E3
                                                                                  *Figures in percentage



                   This round of analysis has been conducted using data from IRS 2008 (round 20)*.
                                                           We have drawn a sub-sample of 39,441




5   THE NEW SEC SYSTEM
DISTRIBUTION OF HOUSEHOLDS
Urban
     New SEC System

                                                12.9              13.2
                                                                          12.6
                                                         11.6
                                        10.2                                      9.8
                                8.6
                          7.6

               5.1                                                                           4.7
                                                                                                     2.6
       1.1


       A1      A2          A3   B1      B2          C1   C2       D1         D2   E1         E2      E3

     Current Urban SEC system

      The current urban SEC system has 8 grades,                         24
      and is based on occupation and education of
                                                           20.5
      chief earner                                                                                 18.2

                                                                                    11.9
                                  7.9          8
                     6.6
         2.8


         A1          A2           B1           B2             C          D              E1         E2
6   THE NEW SEC SYSTEM
DISTRIBUTION OF HOUSEHOLDS
Rural
    New SEC System
                                                                         22.2
                                                                                20.1

                                                                  15.6
                                                                                       12.8
                                                           10.7

                                                     6.2
                                               5.1
                               2.3     3.2
              0.4      1.3
      0.04

      A1       A2      A3      B1      B2       C1   C2     D1    D2     E1     E2     E3


    Current Rural SEC system
                                                                                43
     The current rural SEC system has 4 grades,            40.3
     and is based on education of chief earner and
     material used in construction of dwelling



                                      12.3

              4.3


              R1                       R2                  R3                   R4
  THE NEW SEC SYSTEM                                                                          7
02

    How do we classify
    a household
    in the new SEC system?




8   THE NEW SEC SYSTEM
Just two questions
THAT NEED TO BE ASKED


          SHOW CARD/READ OUT
    Q1a Please take a look at this list and tell me which of these items do you have at
          home? (It could be owned by you, your family, or provided by the employer or it
          could be available in the house you live in; but it should be for the use of just you or
          your family)
          EXPLAIN, IF NECESSARY:
          We have a standard list of items that we use in all kinds of cities and villages. So don’t worry if an item appears
          irrelevant for you, or too ordinary- just go ahead and tell me which items you do have. We need this information just
          for survey purpose only.

          Do you have a…(ITEM) in your home (which is in working condition)?
          CIRCLE ITEMS OWNED/HAVE AT HOME. TICK THE ITEM IF OWNED. ADD THE NO. OF TICKS IN THE BOX.



    Q1b   Does your family own any agricultural land, by agricultural land I mean
          land that is currently under cultivation or plantation?

          SHOW CARD/READ OUT

    Q2    Could you tell me something about the person who makes the biggest
          contribution to the running of the household. To what level has he
          studied?
          RECORD IN GRID. USE GRID TO DETERMINE NEW SEC.

9   THE NEW SEC SYSTEM
RECORDING
The grid

     01
                  Items owned / have access at home   Circle   Tick

                  Electricity Connection               01         √
                  Ceiling Fan                          02         √
                  LPG Stove                            03         √
                  Two Wheeler                          04
                                                                  √
                  Colour TV                            05
                                                                  √
             1a   Refrigerator                         06
                                                                  √
                  Washing Machine                      07

                  Personal Computer/ Laptop            08

                  Car/Jeep/Van                         09         √
                  Air Conditioner                      10



             1b   Agricultural Land                    11         √

                  NUMBER OF STANDARD 11 OWNED                         8




10   THE NEW SEC SYSTEM
RECORDING
The grid
                                                      Chief Earner: Education (Q2)

     02
                                      Literate
                                                                           Some
                                      but no                                                      Graduate/
                                                                           College    Graduate/
               No. of                 formal                                                      Post
                                                   School- 5               (incl a    Post
                         Illiterate   schooling/                SSC/ HSC                          Graduate:
              Durables                             to 9 years              Diploma)   Graduate:
                                      School-                                                     Profession
            (TRANSFER                                                      but not    General
                                      Upto 4                                                      al
             FROM Q1)                                                      Grad
                                      years

                               1           2            3           4          5          6           7

               None           E3          E2           E2          E2          E2         E1          D2

                1             E2          E1           E1          E1          D2         D2          D2

                2             E1          E1           D2          D2          D1         D1          D1

                3             D2          D2           D1          D1          C2         C2          C2

                4             D1          C2           C2          C1          C1         B2          B2

                5             C2          C1           C1          B2          B1         B1          B1

                6             C1          B2           B2          B1          A3         A3          A3

                7             C1          B1           B1          A3          A3         A2          A2

                8             B1          A3           A3          A3          A2         A2          A2

               9+             B1          A3           A3          A2          A2         A1          A1
11   THE NEW SEC SYSTEM
What sort of people are these?
New
SEC
System      Have        Have        Owns       Owns Colour   Use Utensil   Have Two      Have            Have        Have        Have
          Electricity    Fan   Pressure Cooker    TV          Cleaner      Wheeler    Refrigerator   Kitchen Sink Dining Table    AC

 A1

 A2

 A3

 B1

 B2

 C1

 C2

 D1

 D2

 E1

 E2

 E3
   THE NEW SEC SYSTEM
03

What are
the advantages
of the new SEC system?




THE NEW SEC SYSTEM
Advantages
 OF THE NEW SEC SYSTEM




              More discrimination as compared with current systems

              A single system for urban and and rural India

              Less subjectivity- as we no longer use occupation

              It’s simple - easy to answer, not very time consuming, easy
              to classify




14   THE NEW SEC SYSTEM
03

Are there any
drawbacks
to the new SEC system?




THE NEW SEC SYSTEM
There are no serious problems. But…



             We need to be better prepared to handle minor changes
             to the system, because “consumer durables” penetration
             will change faster than education or occupation

             The questioning can appear intrusive to people who are
             unaccustomed to market research. It’s not a problem
             elsewhere




16   THE NEW SEC SYSTEM
04

How did we go about
creating the new system?




THE NEW SEC SYSTEM
How we created the new system



             Extensive analysis based on data drawn from the IRS,
             made available by the MRUC- various rounds, from 2005
             to 2008

             Have also drawn on data from MarketPulse, IMRB’s
             Household panel, supplemented by a special survey




18   THE NEW SEC SYSTEM
The building blocks that were available to us

             ‘Demographic’ variables: e.g. occupation of chief earner,
             education of chief earner, education of housewife, claimed
             monthly household income

             Dwelling type and amenities: e.g. construction material, tap,
             bathroom, number of rooms

             Ownership of consumer durables




19   THE NEW SEC SYSTEM
How we arrange the blocks


                                  ‘A scoring system called LIFE; which takes
                                  into account whether a household owns or
                                  uses a wide-ranging products ranging
                                  from material of wall, roof, mode of
                                  transportation, use of toilet soap, use of
                                  ghee, biscuits, etc.
     The LIFE score is used to
     decide the order of groups
      defined by two or more      In all we used 34 items: giving weights in
              variables
                                  inverse proportion to usage/ownership




20   THE NEW SEC SYSTEM
How the LIFE scores are used – an example
                                                   Chief Earner: Education

                              Literate but
                                                                         Some College   Graduate/     Graduate/
      We compute the average formal
                              no
                                           School- 5 to 9                (incl a        Post          Post
         No. of    Illiterate schooling/
      LIFE* score for each cell            years
                                                          SSC/ HSC
                                                                         Diploma) but   Graduate:     Graduate:
                              School- Upto
         Durables
        defined by number of 4 years                                     not Grad       General       Professional

        durables x education
                          1           2           3            4             5              6              7
         None                 81          98          111          125           130            134            217
         1                    120         133         145          160           165            178            115
         2                    157         166         185          199           222            215            263
         3                    193         211         225          247           265            278            268
         4                    232         250         271          298           319            343            338
         5                    260         286         313          341           370            391            394
         6                    294         338         344          377           438            425            447
         7                    307         384         373          415           456            470            483
         8                    366         429         411          455           497            500            510
         9+                                           592          487           495            558            575



                                                                                          * Excluding durables
21   THE NEW SEC SYSTEM
How the LIFE scores are used – an example
                                                   Chief Earner: Education

                              Literate but
                                                                            Some College   Graduate/       Graduate/
                              no formal
        And then group the cells           School- 5 to 9                   (incl a        Post            Post
        No. of     Illiterate schooling/
                                           years
                                                          SSC/ HSC
                                                                            Diploma) but   Graduate:       Graduate:
        Durablesa similar scoreyears Upto
           with               School-
                              4
                                                                            not Grad       General         Professional


                         1             2           3              4             5               6               7
        None                 81            98          111            125           130             134             217
        1                    120           133         145            160           165             178             115
        2                    157           166         185            199           222             215             263
        3                    193           211         225            247           265             278             268
        4                    232           250         271            298           319             343             338
        5                    260           286         313            341           370             391             394
        6                    294           338         344            377           438             425             447
        7                    307           384         373            415           456             470             483
        8                    366           429         411            455           497             500             510
        9+                                             592            487           495             558             575
                Each group is                                                                   * Excluding durables
               assigned a grade
                                   SEC Grades A1       A2    A3   B1    B2     C1    C2    D1    D2       E1   E2     E3
22   THE NEW SEC SYSTEM
The basis of measuring the discrimination

     We used the Lorenz curve, and the associated Gini coefficient,
     as a basis for measuring discrimination or inequality


         We assume that the system that throws up more inequality is more
         discriminating.


         In other words, the system that shows a bigger difference in
         ownership/consumption between the top half and the bottom half is the
         better one




23   THE NEW SEC SYSTEM
05

What were the
other systems
that we considered?




THE NEW SEC SYSTEM
We’ve evaluated many options


             Point based system using
          education of highest educated
           individual, press exposure of                           A system based on
           housewife, and ownership of                        occupation and education of
            durables plus other aspects                       chief earner and the number
                                                                 of consumer durables
                                                                         owned




                                   A system based on and
                                  education of chief earner
                                   and the “best type” of
                                 consumer durables owned



25   THE NEW SEC SYSTEM
What we learnt from analysis and fieldwork

            Two kinds of variables are better than one. But the gains
            from using three sets of variables is small
            Systems that call for multiple grids or adding up points
            are time consuming; errors in classifying can occur
            A system that requires cards to be shown is not a good
            idea- it’s hard to manage this at the ‘doorstep’
            Occupation is a weak discriminator
            Systems based on consumer durables offer good
            discrimination



26   THE NEW SEC SYSTEM
Our conclusions at the end of earlier rounds

     Consumer durables (number owned) combined with education
     of chief earner is a satisfactory system
         Easy to administer- takes only about 20 seconds more than the current
         urban system
         Discrimination as good or better than urban SEC
         Discrimination much better than rural SEC
     The focus then was to optimize this system- adding or dropping
     consumer durables, if needed
         Many versions of this system have been explored before arriving at the
         current system




27   THE NEW SEC SYSTEM
06


Performance
of the new SEC system?




THE NEW SEC SYSTEM
Penetration of Selected items
 BY THE NEW SEC SYSTEM (U+R)

                                     Color TV                                                          Automobile (car /van/ jeep)
           100   99   99
     100                   96
                                91                                           100       93
                                       87
     90                                                                      90
                                            77
     80                                                                      80
      70                                                                      70
     60                                                                      60
     50                                          43                          50
     40                                                                      40              33
      30                                                                      30
                                                      20
     20                                                                      20                   11
      10                                                    4                 10                          4
                                                                 0       0                                       1    0    0    0    0     0    0       0
      0                                                                       0
           A1    A2   A3   B1   B2     C1   C2   D1   D2   E1   E2    E3               A1    A2   A3     B1     B2    C1   C2   D1   D2   E1   E2    E3


                      Purchased in Past 6 Months - Jam                                       Purchased in Past 6 Months - Toilet Cleaners
     100                                                                      100       91
     90                                                                        90
                                                                                             79
     80                                                                        80
      70                                                                       70                 65
     60                                                                        60
                                                                                                          50
      50   42                                                                  50
                                                                                                                 38
     40          32                                                            40
      30                                                                       30                                     26
                      21                                                                                                   19
     20                    11                                                  20                                               12
                                7      6                                                                                             5
      10                                    3    2    1    0    0    0         10                                                         2    1    0
       0                                                                           0
           A1    A2   A3   B1   B2     C1   C2   D1   D2   E1   E2   E3                 A1   A2   A3      B1     B2   C1   C2   D1   D2   E1   E2   E3

                                                                                                              MRUC/Hansa Research –IRS 2008 (round 20)

29    THE NEW SEC SYSTEM
PENETRATION
New vs Current system (urban)
           Have internet access at home                                                  Have internet access at home
     60    54                                                                 60

     50                                                                       50

     40                                                                       40

     30                                                                       30
                                                                                        19
     20                                                                       20
                 13
                                                                                               9
     10               5                                                       10                      4
                           2    0    0    0    0     0    0       0       0                                  2      1      0           0        0
      0                                                                        0
           A1    A2   A3   B1   B2   C1   C2   D1   D2   E1   E2       E3               A1     A2     B1     B2     C      D       E1           E2


                  Household subscribe any Newspaper                                           Household subscribe any Newspaper
     100    96                                                                 100
     90          82                                                                90    84
     80                                                                            80           71
                      68
      70                                                                           70
     60                    54                                                      60                 56

     50                                                                            50                        43
                                38
     40                                                                            40
                                                                                                                   30
      30                             23                                            30
     20                                   15   12                                  20                                     13      10
      10                                            5    2    3                    10                                                      3
                                                                      1
      0                                                                             0
            A1   A2   A3   B1   B2   C1   C2   D1   D2   E1   E2      E3                 A1     A2    B1     B2     C     D       E1       E2

                                                                                                       MRUC/Hansa Research –IRS 2008 (round 20)

30        THE NEW SEC SYSTEM
PENETRATION
New vs Current system (urban) (CONTD.)
                                      Receive Cable & Satellite                                               Receive Cable & Satellite
                     98
          100              92        90                                                            100
           90                              85    83                                                 90   86    84
                                                      80                                                              80
           80                                              74                                       80                        76
                                                                                                                                        69
           70                                                                                       70
                                                                                                                                                  58
           60                                                   49                                  60                                                     49
           50                                                                                       50
           40                                                        35                             40                                                               33
           30                                                                                       30
                                                                          16
           20                                                                                       20
           10                                                                   5                   10
                                                                                         1
            0                                                                                        0
                     A1    A2        A3    B1    B2   C1   C2   D1   D2   E1    E2       E3              A1    A2     B1      B2        C         D        E1        E2




                 Purchased in Past 6 Months - Ketchup / Sauces                                            Purchased in Past 6 Months - Ketchup / Sauces
     80         72                                                                                  80
     70                                                                                             70
     60               53                                                                            60   55
     50                                                                                             50
                                37                                                                              40
     40                                                                                             40
                                                                                                                       28
     30                                   23                                                        30
                                                19                                                                                 19        16
     20                                               13                                            20
                                                           9    7                                                                                      9        7
     10                                                               5    5                  3     10                                                                    5
                                                                                     2
      0                                                                                              0
            A1        A2        A3        B1    B2    C1   C2   D1   D2    E1       E2        E3         A1     A2     B1          B2        C         D        E1        E2

                                                                                                                           MRUC/Hansa Research –IRS 2008 (round 20)

31   THE NEW SEC SYSTEM
PENETRATION
New vs Current system ( urban ) (CONTD.)
                Purchased in Past 6 Months - Instant Noodles                       Purchased in Past 6 Months - Instant Noodles
           59                                                               60
     60
                                                                            50     48
     50         47
                     40                                                                     38
     40                                                                     40                     33
                          28                                                30                              26
     30
                               22                                                                                  18
     20                             18                                      20
                                         14                                                                              13
                                              10                                                                                9
     10                                            7                        10
                                                        5    2                                                                         4
                                                                  2
      0                                                                      0
           A1   A2   A3   B1   B2   C1   C2   D1   D2   E1   E2   E3               A1       A2     B1       B2     C      D     E1     E2




                 Purchased in Past 6 Months - Toilet Cleaners                           Purchased in Past 6 Months - Toilet Cleaners
          100   92                                                           100
           90        82                                                       90    81
           80                                                                 80
                          69                                                                  69
           70                                                                 70
                               58                                                                    60
           60                                                                 60
           50                       46                                                                       47
                                                                              50
           40                            33                                                                         37
                                                                              40
                                              27
           30                                                                 30                                          22
                                                   19                                                                           18
           20                                           10                    20
                                                                                                                                       9
           10                                                5    2           10
                                                                       1
            0                                                                  0
                A1   A2   A3   B1   B2   C1   C2   D1   D2   E1   E2   E3           A1        A2     B1      B2     C     D     E1     E2

                                                                                                        MRUC/Hansa Research –IRS 2008 (round 20)

32        THE NEW SEC SYSTEM
PERFORMANCE ON DISCRIMINATION
India ( u + r )
Gini coefficients for New SEC system compared with benchmark
                                                Penetration

Own Microwave oven                                  0.4

Own Internet access at home - Through PC / TV       0.7

Own PC at home                                      1.6

Own Camera (still/ digital)                         3.5

Housewife have read a magazine in the last 7        5.8
days
Own DVD player                                      6.8

Own Kitchen Sink                                    8.2

Own - Mobile / Cellular Phone                       12.4

Own Telephone                                       12.6

Receive Cable & Satellite                           31.2

Own Pressure cooker                                 37.0


                                                              0   0.2        0.4         0.6         0.8           1
                       New System                                          Gini Values
                       Benchmark System (MHI)
                                                                   Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
33   THE NEW SEC SYSTEM
PERFORMANCE ON DISCRIMINATION
India ( u + r ) (CONTD.)
Gini coefficients for New SEC system compared with benchmark

                                                Penetration
 Jam                                                 3.3
 Ketchup / Sauces                                    5.3
 Chocolates                                          6.6
 Instant Noodles                                     6.7
 Floor Cleaners                                      11.6
 Toilet Cleaners                                     14.1
 Soft drinks/Fruit Juices                            15.8
 Skin Creams/Lotions                                 21.4
 Utensil cleaners                                    29.7
 Fabric whiteners / blues                            49.8
 Toothpaste                                          57.7
 Shampoo                                             75.1
 Bathing Soaps / Liquid Soaps                        95.8

                                                                0            0.2           0.4           0.6            0.8            1
                            New System                                               Gini Values
                            Benchmark System (MHI)          *Purchased in the last 6 months except soft drinks, skin creams and chocolates
                                                                                Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
34   THE NEW SEC SYSTEM                                                                                                              34
GINI CO-EFFICIENTS
Urban
Gini coefficients for New SEC system compared with benchmark
                                                 Penetration

 Own Microwave oven                                  1.0

 Own Internet access at home - Through PC / TV       1.9

 Own PC at home                                      4.5

 Own Camera (still/ digital)                         8.5

 Housewife have read a magazine in the last 7 days   12.7

 Own DVD player                                      15.7

 Own Kitchen Sink                                    20.9
 Own Telephone                                       23.8

 Own - Mobile / Cellular Phone                       25.9

 Receive Cable & Satellite                           60.0

 Own Pressure cooker                                 69.6

                                                               0   0.2         0.4         0.6         0.8           1

                                                                               Gini Values


                          New System
                          Current System                           Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
35   THE NEW SEC SYSTEM                                                                                                  35
GINI CO-EFFICIENTS
Urban (CONTD.)
Gini coefficients for New SEC system compared with benchmark
                                                  Penetration

 Processed Cheese/Cheese Products
                                                        4.1
 Jam
                                                        8.9
 Ketchup / Sauces
                                                        15.2
 Chocolates
                                                        15.4
 Instant Noodles
                                                        17.4
 Soft drinks/Fruit Juices
                                                        28.3
 Floor Cleaners
                                                        30.2
 Skin Creams/Lotions
                                                        30.6
 Toilet Cleaners
                                                        32.0
 Utensil cleaners
                                                        59.9
 Fabric whiteners / blues
                                                        60.1
 Toothpaste
                                                        80.8
 Shampoo
                                                        84.9

                                                                0          0.2           0.4           0.6            0.8            1
                            New System                                            Gini Values
                                                          *Purchased in the last 6 months except soft drinks, skin creams and chocolates
                            Current System                              Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
36   THE NEW SEC SYSTEM                                                                                                       36
GINI CO-EFFICIENTS
Rural
Gini coefficients for New SEC system compared with benchmark
                                                 Penetration

 Own Microwave oven                                  0.1

 Own Internet access at home - Through PC / TV       0.1

 Own PC at home                                      0.3

 Own Camera (still/ digital)                         1.3

 Own Kitchen Sink                                    2.7
 Housewife have read a magazine in the last 7 days   2.8
 Own DVD player                                      2.8
 Own - Mobile / Cellular Phone                       6.6
 Own Telephone                                       7.6
 Rural Assets - Table Fan                            13.4
 Receive Cable & Satellite                           18.6
 Own Pressure cooker                                 22.8

 Rural Assets - In-house toilet                      30.9

                                                               0   0.2       0.4          0.6         0.8          1
                             New System                                    Gini Values

                             Current System                        Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
37   THE NEW SEC SYSTEM                                                                                                 37
GINI CO-EFFICIENTS
Rural (CONTD.)
Gini coefficients for New SEC system compared with benchmark
                                                   Penetration

 Instant Noodles                                       2.1

 Chocolates                                            2.8

 Floor Cleaners                                        3.5

 Toilet Cleaners                                       6.2

 Soft drinks/Fruit Juices                              10.4
 Utensil cleaners                                      16.5
 Skin Creams/Lotions                                   17.4
 Fabric whiteners / blues                              45.3
 Toothpaste                                            47.6
 Shampoo                                               70.8
 Biscuits                                              73.2

                                                               0        0.2           0.4            0.6           0.8            1

                                                                                      Gini Values


                            New System
                                                          *Purchased in the last 6 months except soft drinks, skin creams and chocolates
                            Current System                              Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
38   THE NEW SEC SYSTEM
PERFORMANCE ON DISCRIMINATION
Conclusion




            The new SEC system is better than the current
            urban system , and much better than the current
            rural system




39   THE NEW SEC SYSTEM
PERFORMANCE OF THE SYSTEM
Homogeneity within the grade : India (u + r)
                  MHI System                                      New SEC System
                                           Inter                                                 Inter
          Distribution of    Median                              Distribution of   Median
  Level                                    Quartile      Level                                   Quartile
          Households %       LIFE                                Households %      LIFE
                                           Range (IQR)                                           Range (IQR)

 1                    0.5         702              186   A1                  0.4         804             116
 2                    1.5        618               236   A2                  1.8         687             150
 3                    4.2         514              243   A3                  3.2         590             173
 4                    3.5        455               236   B1                  4.3         494             172
 5                    4.7         391              227   B2                  5.3         430             164
 6                     7.1        347              207   C1                  7.5         369             142
 7                   11.7        289               178   C2                  7.9         319             124
 8                   19.3         232              155   D1                 11.4         270             117
 9                   19.2         181              139   D2                 14.7         222             106
 10                  13.5         136              110   E1                 18.4         164                90
 11                  12.9         125              111   E2                 15.4         117                75
 12                   2.1             95           101   E3                  9.7            80              65
     THE NEW SEC SYSTEM                                                  Median LIFE (Urban + Rural): 220
PERFORMANCE OF THE SYSTEM
Homogeneity within the grade : India (u + r)
           MHI System                                              New SEC System
          Distribution of                 Inter Quartile           Distribution of                 Inter Quartile
  Level                     Median LIFE                    Level                     Median LIFE
          Households %                    Range (IQR)              Households %                    Range (IQR)

 1                    0.5          702              186    A1                  0.4          804              116

 2                    1.5          618              236    A2                  1.8          687              150

 3                    4.2          514              243    A3                  3.2          590              173

 4                    3.5          455              236    B1                  4.3          494              172

 5                    4.7          391              227    B2                  5.3          430              164

 6                    7.1          347              207    C1                  7.5          369              142

 7                   11.7          289              178    C2                  7.9          319              124

 8                   19.3          232              155    D1                 11.4          270              117

 9                   19.2          181              139    D2                 14.7          222              106

 10                  13.5          136              110    E1                 18.4          164               90

 11                  12.9          125              111    E2                 15.4          117               75

 12                   2.1            95             101    E3                  9.7            80              65
     THE NEW SEC SYSTEM                                                    Median LIFE (Urban + Rural): 220
PERFORMANCE OF THE SYSTEM
Homogeneity within the grade : Urban India
              Current SEC System                                         New SEC System
              Distribution of                 Inter Quartile           Distribution of                 Inter Quartile
      Level                     Median LIFE                    Level                     Median LIFE
              Households %                    Range (IQR)              Households %                    Range (IQR)

     SEC A1               2.8          702              189    A1                  1.1          807              106

     SEC A2               6.6          616              225    A2                  5.1          704              132

     SEC B1                                                    A3                  7.6          610              147
                          7.9          539              215
                                                               B1                  8.6          532              158
     SEC B2               8.0          467              221
                                                               B2                 10.2          463              158
     SEC C               20.5          408              210
                                                               C1                 12.9          399              136
     SEC D               24.0          320              167
                                                               C2                 11.6          347              118
     SEC E1              11.9          280              155
                                                               D1                 13.2          300              113
     SEC E2              18.2          212              137
                                                               D2                 12.6          251              100
                                                               E1                  9.8          194               92
                                                               E2                  4.7          148               93
                                                               E3                  2.6          112               80

42    THE NEW SEC SYSTEM                                                             Median LIFE (Urban India): 354
PERFORMANCE ON HOMOGENEITY
Conclusion




            The new SEC system is able to reduce
            heterogeneity within social grade- and stretch
            the differences by grade




43   THE NEW SEC SYSTEM
07



Conclusion

THE NEW SEC SYSTEM
In Conclusion

            We have a system that is simple, easy to administer. It
            gives us good discrimination; the social grades created
            are more homogenous

            But we do need to revisit the system at least once every two
            years; and make sure that when a change is needed, this is
            a smooth process

            It’s easy to begin using the new system. For those who
            need to keep track of the old SEC for reasons of
            comparability, the new system means just one more
            question- which can be tagged on right at the end.

45   THE NEW SEC SYSTEM
Thank You



46   THE NEW SEC SYSTEM
08



Appendices



THE NEW SEC SYSTEM
01.Variables in the LIFE scoring system


                    HOUSEHOLD                  DURABLES                                                     FMCG

            Electricity               Air Conditioner                       Tea/ Coffee                          Biscuits #

            LPG Stove                 Personal Computer/ Laptop             Skin Creams/Lotions                  Toothpaste/ toothpowder #
  Urban
 oriented   Type of accommodation #   Mode of Transportation #              Soft drinks/Fruit Juices             Washing cakes / bars #
  items
            Material on roof #        Refrigerator                          Fabric whiteners / blues             Washing powders / liquids #

            Material on wall #        Washing Machine                       Cooking oil: vanaspati/ edible       Toilet Cleaners
  Rural                                                                     #
 oriented
  items     Kitchen sink              Ceiling Fan                           Ghee / Desi Ghee                     Talcum Powder

            Subscribe newspaper       TV/ Cable & satellite #               Toilet Soaps/bathing
                                                                            soaps/Liquid Soaps #
Affluence   Travel abroad *           Camera #
 oriented
  items     Land ownership *          Music/entertainmentl #

                                      Telephone

                                      Tractor/ Power tiller

 POINTS                    250                       300                                                     450




48   THE NEW SEC SYSTEM                                         # contains sub-levels ; (*): Travel abroad- Urban only / Land ownership: Rural only
02.The master set of consumer durables
 No.
 S.



        Item                                             All India                Urban                  Rural
   1                                                                 0.5                   1.6                    0.1
        Air conditioner
   2                                                                 1.6                   3.9                    0.5
        Automobile
   3                                                                 4.0                  11.5                    0.7
        Washing machine
   4                                                                 13.1                 30.6                    5.5
        Refrigerator
   5                                                               35.5                   64.2                   22.9
        Color TV
   6                                                               15.1                   27.4                    9.7
        Two wheeler
    7                                                              37.0                   69.6                   22.8
        Pressure cooker
   8                                                               33.6                   68.2                   18.4
        LPG stove
   9                                                               55.4                   83.6                   43.0
        Ceiling fan
  10                                                               73.4                   94.7                   64.1
        Electricity connection
   11                                                                   -                  0.1                    n/a
        More than one car (Urban specific)
  12                                                                 1.8                   5.2                    0.3
        Personal Computer/ laptop
   13                                                                   -                  n/a                   35.1
        Agricultural Land (Rural specific)
  14                                                                    -                  n/a                    1.8
        Tractor (Rural specific)
                                             * Source : MRUC/Hansa Research a sample of 39441 from IRS 2008 (Round 20)
THE NEW SEC SYSTEM
03.All India benchmark: MHI groups used


                          MHI
                                   MHI Groups
                          Grades

                          1        Rs.20001 +
                          2        Rs.12001 to Rs.20000
                          3        Rs.8001 to Rs.12000
                          4        Rs.6001 to Rs.8000
                          5        Rs.5001 to Rs.6000
                          6        Rs.4001 to Rs.5000
                          7        Rs.3001 to Rs.4000
                          8        Rs.2001 to Rs.3000
                          9        Rs.1501 to Rs.2000
                          10       Rs.1001 to Rs.1500
                          11       Rs.501 to Rs.1000
                          12       Up to Rs.500




50   THE NEW SEC SYSTEM

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The New SEC System

  • 1. MUMBAI. MAY 3, 2011 SOCIO-ECONOMIC CLASSIFICATION-2011 The New SEC system THE NEW SEC SYSTEM
  • 2. What is the new SEC system? 01 How do we classify a household in the new SEC system? 02 What are the advantages/ drawbacks of the new SEC system? 03 How was the new SEC system created? 04 What are the other systems that we considered? 05 What is the performance of the new SEC system? 06 Conclusion 07 THE NEW SEC SYSTEM
  • 3. 01 What is the new SEC system? 3 THE NEW SEC SYSTEM
  • 4. THE NEW SEC SYSTEM The new SEC system is used to classify households in India. It’s based on two variables: • Education of chief earner • Number of “consumer durables” ( from a predefined list)- owned by the family. The list has 11 items, ranging from ‘electricity connection’ and ‘agricultural land’- to cars and air conditioners We have 12 grades in the new SEC system, ranging from A1 to E3 4 THE NEW SEC SYSTEM
  • 5. DISTRIBUTION OF HOUSEHOLDS India ( urban + rural ) New SEC System 18.4 14.7 15.4 11.4 9.7 7.5 7.9 5.3 4.3 3.2 1.8 0.4 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 *Figures in percentage This round of analysis has been conducted using data from IRS 2008 (round 20)*. We have drawn a sub-sample of 39,441 5 THE NEW SEC SYSTEM
  • 6. DISTRIBUTION OF HOUSEHOLDS Urban New SEC System 12.9 13.2 12.6 11.6 10.2 9.8 8.6 7.6 5.1 4.7 2.6 1.1 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 Current Urban SEC system The current urban SEC system has 8 grades, 24 and is based on occupation and education of 20.5 chief earner 18.2 11.9 7.9 8 6.6 2.8 A1 A2 B1 B2 C D E1 E2 6 THE NEW SEC SYSTEM
  • 7. DISTRIBUTION OF HOUSEHOLDS Rural New SEC System 22.2 20.1 15.6 12.8 10.7 6.2 5.1 2.3 3.2 0.4 1.3 0.04 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 Current Rural SEC system 43 The current rural SEC system has 4 grades, 40.3 and is based on education of chief earner and material used in construction of dwelling 12.3 4.3 R1 R2 R3 R4 THE NEW SEC SYSTEM 7
  • 8. 02 How do we classify a household in the new SEC system? 8 THE NEW SEC SYSTEM
  • 9. Just two questions THAT NEED TO BE ASKED SHOW CARD/READ OUT Q1a Please take a look at this list and tell me which of these items do you have at home? (It could be owned by you, your family, or provided by the employer or it could be available in the house you live in; but it should be for the use of just you or your family) EXPLAIN, IF NECESSARY: We have a standard list of items that we use in all kinds of cities and villages. So don’t worry if an item appears irrelevant for you, or too ordinary- just go ahead and tell me which items you do have. We need this information just for survey purpose only. Do you have a…(ITEM) in your home (which is in working condition)? CIRCLE ITEMS OWNED/HAVE AT HOME. TICK THE ITEM IF OWNED. ADD THE NO. OF TICKS IN THE BOX. Q1b Does your family own any agricultural land, by agricultural land I mean land that is currently under cultivation or plantation? SHOW CARD/READ OUT Q2 Could you tell me something about the person who makes the biggest contribution to the running of the household. To what level has he studied? RECORD IN GRID. USE GRID TO DETERMINE NEW SEC. 9 THE NEW SEC SYSTEM
  • 10. RECORDING The grid 01 Items owned / have access at home Circle Tick Electricity Connection 01 √ Ceiling Fan 02 √ LPG Stove 03 √ Two Wheeler 04 √ Colour TV 05 √ 1a Refrigerator 06 √ Washing Machine 07 Personal Computer/ Laptop 08 Car/Jeep/Van 09 √ Air Conditioner 10 1b Agricultural Land 11 √ NUMBER OF STANDARD 11 OWNED 8 10 THE NEW SEC SYSTEM
  • 11. RECORDING The grid Chief Earner: Education (Q2) 02 Literate Some but no Graduate/ College Graduate/ No. of formal Post School- 5 (incl a Post Illiterate schooling/ SSC/ HSC Graduate: Durables to 9 years Diploma) Graduate: School- Profession (TRANSFER but not General Upto 4 al FROM Q1) Grad years 1 2 3 4 5 6 7 None E3 E2 E2 E2 E2 E1 D2 1 E2 E1 E1 E1 D2 D2 D2 2 E1 E1 D2 D2 D1 D1 D1 3 D2 D2 D1 D1 C2 C2 C2 4 D1 C2 C2 C1 C1 B2 B2 5 C2 C1 C1 B2 B1 B1 B1 6 C1 B2 B2 B1 A3 A3 A3 7 C1 B1 B1 A3 A3 A2 A2 8 B1 A3 A3 A3 A2 A2 A2 9+ B1 A3 A3 A2 A2 A1 A1 11 THE NEW SEC SYSTEM
  • 12. What sort of people are these? New SEC System Have Have Owns Owns Colour Use Utensil Have Two Have Have Have Have Electricity Fan Pressure Cooker TV Cleaner Wheeler Refrigerator Kitchen Sink Dining Table AC A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 THE NEW SEC SYSTEM
  • 13. 03 What are the advantages of the new SEC system? THE NEW SEC SYSTEM
  • 14. Advantages OF THE NEW SEC SYSTEM More discrimination as compared with current systems A single system for urban and and rural India Less subjectivity- as we no longer use occupation It’s simple - easy to answer, not very time consuming, easy to classify 14 THE NEW SEC SYSTEM
  • 15. 03 Are there any drawbacks to the new SEC system? THE NEW SEC SYSTEM
  • 16. There are no serious problems. But… We need to be better prepared to handle minor changes to the system, because “consumer durables” penetration will change faster than education or occupation The questioning can appear intrusive to people who are unaccustomed to market research. It’s not a problem elsewhere 16 THE NEW SEC SYSTEM
  • 17. 04 How did we go about creating the new system? THE NEW SEC SYSTEM
  • 18. How we created the new system Extensive analysis based on data drawn from the IRS, made available by the MRUC- various rounds, from 2005 to 2008 Have also drawn on data from MarketPulse, IMRB’s Household panel, supplemented by a special survey 18 THE NEW SEC SYSTEM
  • 19. The building blocks that were available to us ‘Demographic’ variables: e.g. occupation of chief earner, education of chief earner, education of housewife, claimed monthly household income Dwelling type and amenities: e.g. construction material, tap, bathroom, number of rooms Ownership of consumer durables 19 THE NEW SEC SYSTEM
  • 20. How we arrange the blocks ‘A scoring system called LIFE; which takes into account whether a household owns or uses a wide-ranging products ranging from material of wall, roof, mode of transportation, use of toilet soap, use of ghee, biscuits, etc. The LIFE score is used to decide the order of groups defined by two or more In all we used 34 items: giving weights in variables inverse proportion to usage/ownership 20 THE NEW SEC SYSTEM
  • 21. How the LIFE scores are used – an example Chief Earner: Education Literate but Some College Graduate/ Graduate/ We compute the average formal no School- 5 to 9 (incl a Post Post No. of Illiterate schooling/ LIFE* score for each cell years SSC/ HSC Diploma) but Graduate: Graduate: School- Upto Durables defined by number of 4 years not Grad General Professional durables x education 1 2 3 4 5 6 7 None 81 98 111 125 130 134 217 1 120 133 145 160 165 178 115 2 157 166 185 199 222 215 263 3 193 211 225 247 265 278 268 4 232 250 271 298 319 343 338 5 260 286 313 341 370 391 394 6 294 338 344 377 438 425 447 7 307 384 373 415 456 470 483 8 366 429 411 455 497 500 510 9+ 592 487 495 558 575 * Excluding durables 21 THE NEW SEC SYSTEM
  • 22. How the LIFE scores are used – an example Chief Earner: Education Literate but Some College Graduate/ Graduate/ no formal And then group the cells School- 5 to 9 (incl a Post Post No. of Illiterate schooling/ years SSC/ HSC Diploma) but Graduate: Graduate: Durablesa similar scoreyears Upto with School- 4 not Grad General Professional 1 2 3 4 5 6 7 None 81 98 111 125 130 134 217 1 120 133 145 160 165 178 115 2 157 166 185 199 222 215 263 3 193 211 225 247 265 278 268 4 232 250 271 298 319 343 338 5 260 286 313 341 370 391 394 6 294 338 344 377 438 425 447 7 307 384 373 415 456 470 483 8 366 429 411 455 497 500 510 9+ 592 487 495 558 575 Each group is * Excluding durables assigned a grade SEC Grades A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 22 THE NEW SEC SYSTEM
  • 23. The basis of measuring the discrimination We used the Lorenz curve, and the associated Gini coefficient, as a basis for measuring discrimination or inequality We assume that the system that throws up more inequality is more discriminating. In other words, the system that shows a bigger difference in ownership/consumption between the top half and the bottom half is the better one 23 THE NEW SEC SYSTEM
  • 24. 05 What were the other systems that we considered? THE NEW SEC SYSTEM
  • 25. We’ve evaluated many options Point based system using education of highest educated individual, press exposure of A system based on housewife, and ownership of occupation and education of durables plus other aspects chief earner and the number of consumer durables owned A system based on and education of chief earner and the “best type” of consumer durables owned 25 THE NEW SEC SYSTEM
  • 26. What we learnt from analysis and fieldwork Two kinds of variables are better than one. But the gains from using three sets of variables is small Systems that call for multiple grids or adding up points are time consuming; errors in classifying can occur A system that requires cards to be shown is not a good idea- it’s hard to manage this at the ‘doorstep’ Occupation is a weak discriminator Systems based on consumer durables offer good discrimination 26 THE NEW SEC SYSTEM
  • 27. Our conclusions at the end of earlier rounds Consumer durables (number owned) combined with education of chief earner is a satisfactory system Easy to administer- takes only about 20 seconds more than the current urban system Discrimination as good or better than urban SEC Discrimination much better than rural SEC The focus then was to optimize this system- adding or dropping consumer durables, if needed Many versions of this system have been explored before arriving at the current system 27 THE NEW SEC SYSTEM
  • 28. 06 Performance of the new SEC system? THE NEW SEC SYSTEM
  • 29. Penetration of Selected items BY THE NEW SEC SYSTEM (U+R) Color TV Automobile (car /van/ jeep) 100 99 99 100 96 91 100 93 87 90 90 77 80 80 70 70 60 60 50 43 50 40 40 33 30 30 20 20 20 11 10 4 10 4 0 0 1 0 0 0 0 0 0 0 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 Purchased in Past 6 Months - Jam Purchased in Past 6 Months - Toilet Cleaners 100 100 91 90 90 79 80 80 70 70 65 60 60 50 50 42 50 38 40 32 40 30 30 26 21 19 20 11 20 12 7 6 5 10 3 2 1 0 0 0 10 2 1 0 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 MRUC/Hansa Research –IRS 2008 (round 20) 29 THE NEW SEC SYSTEM
  • 30. PENETRATION New vs Current system (urban) Have internet access at home Have internet access at home 60 54 60 50 50 40 40 30 30 19 20 20 13 9 10 5 10 4 2 0 0 0 0 0 0 0 0 2 1 0 0 0 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 B1 B2 C D E1 E2 Household subscribe any Newspaper Household subscribe any Newspaper 100 96 100 90 82 90 84 80 80 71 68 70 70 60 54 60 56 50 50 43 38 40 40 30 30 23 30 20 15 12 20 13 10 10 5 2 3 10 3 1 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 B1 B2 C D E1 E2 MRUC/Hansa Research –IRS 2008 (round 20) 30 THE NEW SEC SYSTEM
  • 31. PENETRATION New vs Current system (urban) (CONTD.) Receive Cable & Satellite Receive Cable & Satellite 98 100 92 90 100 90 85 83 90 86 84 80 80 80 74 80 76 69 70 70 58 60 49 60 49 50 50 40 35 40 33 30 30 16 20 20 10 5 10 1 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 B1 B2 C D E1 E2 Purchased in Past 6 Months - Ketchup / Sauces Purchased in Past 6 Months - Ketchup / Sauces 80 72 80 70 70 60 53 60 55 50 50 37 40 40 40 28 30 23 30 19 19 16 20 13 20 9 7 9 7 10 5 5 3 10 5 2 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 B1 B2 C D E1 E2 MRUC/Hansa Research –IRS 2008 (round 20) 31 THE NEW SEC SYSTEM
  • 32. PENETRATION New vs Current system ( urban ) (CONTD.) Purchased in Past 6 Months - Instant Noodles Purchased in Past 6 Months - Instant Noodles 59 60 60 50 48 50 47 40 38 40 40 33 28 30 26 30 22 18 20 18 20 14 13 10 9 10 7 10 5 2 4 2 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 B1 B2 C D E1 E2 Purchased in Past 6 Months - Toilet Cleaners Purchased in Past 6 Months - Toilet Cleaners 100 92 100 90 82 90 81 80 80 69 69 70 70 58 60 60 60 50 46 47 50 40 33 37 40 27 30 30 22 19 18 20 10 20 9 10 5 2 10 1 0 0 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 A1 A2 B1 B2 C D E1 E2 MRUC/Hansa Research –IRS 2008 (round 20) 32 THE NEW SEC SYSTEM
  • 33. PERFORMANCE ON DISCRIMINATION India ( u + r ) Gini coefficients for New SEC system compared with benchmark Penetration Own Microwave oven 0.4 Own Internet access at home - Through PC / TV 0.7 Own PC at home 1.6 Own Camera (still/ digital) 3.5 Housewife have read a magazine in the last 7 5.8 days Own DVD player 6.8 Own Kitchen Sink 8.2 Own - Mobile / Cellular Phone 12.4 Own Telephone 12.6 Receive Cable & Satellite 31.2 Own Pressure cooker 37.0 0 0.2 0.4 0.6 0.8 1 New System Gini Values Benchmark System (MHI) Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20) 33 THE NEW SEC SYSTEM
  • 34. PERFORMANCE ON DISCRIMINATION India ( u + r ) (CONTD.) Gini coefficients for New SEC system compared with benchmark Penetration Jam 3.3 Ketchup / Sauces 5.3 Chocolates 6.6 Instant Noodles 6.7 Floor Cleaners 11.6 Toilet Cleaners 14.1 Soft drinks/Fruit Juices 15.8 Skin Creams/Lotions 21.4 Utensil cleaners 29.7 Fabric whiteners / blues 49.8 Toothpaste 57.7 Shampoo 75.1 Bathing Soaps / Liquid Soaps 95.8 0 0.2 0.4 0.6 0.8 1 New System Gini Values Benchmark System (MHI) *Purchased in the last 6 months except soft drinks, skin creams and chocolates Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20) 34 THE NEW SEC SYSTEM 34
  • 35. GINI CO-EFFICIENTS Urban Gini coefficients for New SEC system compared with benchmark Penetration Own Microwave oven 1.0 Own Internet access at home - Through PC / TV 1.9 Own PC at home 4.5 Own Camera (still/ digital) 8.5 Housewife have read a magazine in the last 7 days 12.7 Own DVD player 15.7 Own Kitchen Sink 20.9 Own Telephone 23.8 Own - Mobile / Cellular Phone 25.9 Receive Cable & Satellite 60.0 Own Pressure cooker 69.6 0 0.2 0.4 0.6 0.8 1 Gini Values New System Current System Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20) 35 THE NEW SEC SYSTEM 35
  • 36. GINI CO-EFFICIENTS Urban (CONTD.) Gini coefficients for New SEC system compared with benchmark Penetration Processed Cheese/Cheese Products 4.1 Jam 8.9 Ketchup / Sauces 15.2 Chocolates 15.4 Instant Noodles 17.4 Soft drinks/Fruit Juices 28.3 Floor Cleaners 30.2 Skin Creams/Lotions 30.6 Toilet Cleaners 32.0 Utensil cleaners 59.9 Fabric whiteners / blues 60.1 Toothpaste 80.8 Shampoo 84.9 0 0.2 0.4 0.6 0.8 1 New System Gini Values *Purchased in the last 6 months except soft drinks, skin creams and chocolates Current System Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20) 36 THE NEW SEC SYSTEM 36
  • 37. GINI CO-EFFICIENTS Rural Gini coefficients for New SEC system compared with benchmark Penetration Own Microwave oven 0.1 Own Internet access at home - Through PC / TV 0.1 Own PC at home 0.3 Own Camera (still/ digital) 1.3 Own Kitchen Sink 2.7 Housewife have read a magazine in the last 7 days 2.8 Own DVD player 2.8 Own - Mobile / Cellular Phone 6.6 Own Telephone 7.6 Rural Assets - Table Fan 13.4 Receive Cable & Satellite 18.6 Own Pressure cooker 22.8 Rural Assets - In-house toilet 30.9 0 0.2 0.4 0.6 0.8 1 New System Gini Values Current System Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20) 37 THE NEW SEC SYSTEM 37
  • 38. GINI CO-EFFICIENTS Rural (CONTD.) Gini coefficients for New SEC system compared with benchmark Penetration Instant Noodles 2.1 Chocolates 2.8 Floor Cleaners 3.5 Toilet Cleaners 6.2 Soft drinks/Fruit Juices 10.4 Utensil cleaners 16.5 Skin Creams/Lotions 17.4 Fabric whiteners / blues 45.3 Toothpaste 47.6 Shampoo 70.8 Biscuits 73.2 0 0.2 0.4 0.6 0.8 1 Gini Values New System *Purchased in the last 6 months except soft drinks, skin creams and chocolates Current System Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20) 38 THE NEW SEC SYSTEM
  • 39. PERFORMANCE ON DISCRIMINATION Conclusion The new SEC system is better than the current urban system , and much better than the current rural system 39 THE NEW SEC SYSTEM
  • 40. PERFORMANCE OF THE SYSTEM Homogeneity within the grade : India (u + r) MHI System New SEC System Inter Inter Distribution of Median Distribution of Median Level Quartile Level Quartile Households % LIFE Households % LIFE Range (IQR) Range (IQR) 1 0.5 702 186 A1 0.4 804 116 2 1.5 618 236 A2 1.8 687 150 3 4.2 514 243 A3 3.2 590 173 4 3.5 455 236 B1 4.3 494 172 5 4.7 391 227 B2 5.3 430 164 6 7.1 347 207 C1 7.5 369 142 7 11.7 289 178 C2 7.9 319 124 8 19.3 232 155 D1 11.4 270 117 9 19.2 181 139 D2 14.7 222 106 10 13.5 136 110 E1 18.4 164 90 11 12.9 125 111 E2 15.4 117 75 12 2.1 95 101 E3 9.7 80 65 THE NEW SEC SYSTEM Median LIFE (Urban + Rural): 220
  • 41. PERFORMANCE OF THE SYSTEM Homogeneity within the grade : India (u + r) MHI System New SEC System Distribution of Inter Quartile Distribution of Inter Quartile Level Median LIFE Level Median LIFE Households % Range (IQR) Households % Range (IQR) 1 0.5 702 186 A1 0.4 804 116 2 1.5 618 236 A2 1.8 687 150 3 4.2 514 243 A3 3.2 590 173 4 3.5 455 236 B1 4.3 494 172 5 4.7 391 227 B2 5.3 430 164 6 7.1 347 207 C1 7.5 369 142 7 11.7 289 178 C2 7.9 319 124 8 19.3 232 155 D1 11.4 270 117 9 19.2 181 139 D2 14.7 222 106 10 13.5 136 110 E1 18.4 164 90 11 12.9 125 111 E2 15.4 117 75 12 2.1 95 101 E3 9.7 80 65 THE NEW SEC SYSTEM Median LIFE (Urban + Rural): 220
  • 42. PERFORMANCE OF THE SYSTEM Homogeneity within the grade : Urban India Current SEC System New SEC System Distribution of Inter Quartile Distribution of Inter Quartile Level Median LIFE Level Median LIFE Households % Range (IQR) Households % Range (IQR) SEC A1 2.8 702 189 A1 1.1 807 106 SEC A2 6.6 616 225 A2 5.1 704 132 SEC B1 A3 7.6 610 147 7.9 539 215 B1 8.6 532 158 SEC B2 8.0 467 221 B2 10.2 463 158 SEC C 20.5 408 210 C1 12.9 399 136 SEC D 24.0 320 167 C2 11.6 347 118 SEC E1 11.9 280 155 D1 13.2 300 113 SEC E2 18.2 212 137 D2 12.6 251 100 E1 9.8 194 92 E2 4.7 148 93 E3 2.6 112 80 42 THE NEW SEC SYSTEM Median LIFE (Urban India): 354
  • 43. PERFORMANCE ON HOMOGENEITY Conclusion The new SEC system is able to reduce heterogeneity within social grade- and stretch the differences by grade 43 THE NEW SEC SYSTEM
  • 45. In Conclusion We have a system that is simple, easy to administer. It gives us good discrimination; the social grades created are more homogenous But we do need to revisit the system at least once every two years; and make sure that when a change is needed, this is a smooth process It’s easy to begin using the new system. For those who need to keep track of the old SEC for reasons of comparability, the new system means just one more question- which can be tagged on right at the end. 45 THE NEW SEC SYSTEM
  • 46. Thank You 46 THE NEW SEC SYSTEM
  • 48. 01.Variables in the LIFE scoring system HOUSEHOLD DURABLES FMCG Electricity Air Conditioner Tea/ Coffee Biscuits # LPG Stove Personal Computer/ Laptop Skin Creams/Lotions Toothpaste/ toothpowder # Urban oriented Type of accommodation # Mode of Transportation # Soft drinks/Fruit Juices Washing cakes / bars # items Material on roof # Refrigerator Fabric whiteners / blues Washing powders / liquids # Material on wall # Washing Machine Cooking oil: vanaspati/ edible Toilet Cleaners Rural # oriented items Kitchen sink Ceiling Fan Ghee / Desi Ghee Talcum Powder Subscribe newspaper TV/ Cable & satellite # Toilet Soaps/bathing soaps/Liquid Soaps # Affluence Travel abroad * Camera # oriented items Land ownership * Music/entertainmentl # Telephone Tractor/ Power tiller POINTS 250 300 450 48 THE NEW SEC SYSTEM # contains sub-levels ; (*): Travel abroad- Urban only / Land ownership: Rural only
  • 49. 02.The master set of consumer durables No. S. Item All India Urban Rural 1 0.5 1.6 0.1 Air conditioner 2 1.6 3.9 0.5 Automobile 3 4.0 11.5 0.7 Washing machine 4 13.1 30.6 5.5 Refrigerator 5 35.5 64.2 22.9 Color TV 6 15.1 27.4 9.7 Two wheeler 7 37.0 69.6 22.8 Pressure cooker 8 33.6 68.2 18.4 LPG stove 9 55.4 83.6 43.0 Ceiling fan 10 73.4 94.7 64.1 Electricity connection 11 - 0.1 n/a More than one car (Urban specific) 12 1.8 5.2 0.3 Personal Computer/ laptop 13 - n/a 35.1 Agricultural Land (Rural specific) 14 - n/a 1.8 Tractor (Rural specific) * Source : MRUC/Hansa Research a sample of 39441 from IRS 2008 (Round 20) THE NEW SEC SYSTEM
  • 50. 03.All India benchmark: MHI groups used MHI MHI Groups Grades 1 Rs.20001 + 2 Rs.12001 to Rs.20000 3 Rs.8001 to Rs.12000 4 Rs.6001 to Rs.8000 5 Rs.5001 to Rs.6000 6 Rs.4001 to Rs.5000 7 Rs.3001 to Rs.4000 8 Rs.2001 to Rs.3000 9 Rs.1501 to Rs.2000 10 Rs.1001 to Rs.1500 11 Rs.501 to Rs.1000 12 Up to Rs.500 50 THE NEW SEC SYSTEM