cluelessresearch.com

ABEP, the Brazilian association of market research firms, has just approved the new "Brazil criterion" or CCEB.  CCEB is the standardized way to measure survey respondents’  consumption power by asking questions about consumption items they have and the education of the head of the household. They argue this better than just asking an individual’s household income, particularly in countries with high inflation or black market economies.

The newly designed CCEB was designed using a regression of household income on a  set of items and trimming them down using qualitative. For example, computers are excluded given the accelerated increase in computer ownership taking place. We don’t want items  that are subject to large changes in a short period of time, since consumption power itself does not in general move very fast.

My first qualm with it is (you guessed) methodological in nature. You see, the regression they estimated as a basis of the index has the log of household income on the set of items with no interactions whatsoever! This can’t possibly be the "best" regression they could find! And I am pretty sure it wasn’t. The underlying objective is to have a way for interviewers on the field to categorize the "class" of the respondent as a filter (for quotas), and they probably think interviewers in Brazil know how to add but not how to multiply. ABEP criticizes the Mexico index for using a classification tree  (which neatly allows interactions) for being too prone to error by interviewers. I would like to see the study showing this.

So, how does the CCEB look like? Based on the regression they created a point system.  Thus, if you have one color TV you get one point and if you have four you get four points. In addition, you get extra points for the education of the head of the household.

Now excuse me for I have to go  to the store buy some cheap radios…