Hansa Research launches tool for deducing Real Household Income

Hansa Research has released eMHI, a new tool for ascertaining Real Household Income. According to Hansa executives, collecting income data in India is fraught with roadblocks, and while surveys are considered accurate at capturing product usage and ownership, the same cannot be said of income because of the sensitivities involved -- income tends to be over-estimated in lower classes and under-estimated in upper ones. Measuring real income requires specialised, elaborate income studies.

Hansa conducted a special income study to accurately measure income. The study also measured product ownership/consumption. Based on this information, Hansa developed a model to predict real income based on product consumption, separately by population class.

This model was validated with the help of 'National Account Statistics', traditional MHI and new SEC. To arrive at real income in any customised study, all one needs to do is to capture details of 18 products and use the model.

The IRS team figured that there is a significant relationship between household prosperity/income and product consumption. The team conducts a special income survey across various pop-strata to measure real household income. The survey also measures the ownership/consumptions of a number of durables and FMCG products.

This is followed by developing relationships (equations) between real income and product consumption across various pop-strata. This income is then validated with various sources, as detailed in the 'Validation' section. With the availability of eMHI, a researcher needs to capture the 18 variables which go into it to arrive at real household income.

The findings are validated with the following sources: income survey, national accounts data, traditional MHI and new SEC. The eMHI would be made available in IRS.

The validation and analysis was carried out with quarter data, and Hansa executives believe the model will be more robust with the annual data. The model needs to be revisited every three years to take care of the changes in product consumption.