The New SEC System: Socio-Economic Classification-2011

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
THE NEW SEC SYSTEM
06
Conclusion
07
01
What is the new
SEC system?
THE NEW SEC SYSTEM
THE NEW SEC SYSTEM
The new SEC system is used to classify households in India.

Its 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
15.4
14.7
11.4
9.7
3.2
4.3
7.5
7.9
C1
C2
5.3
1.8
0.4
A1
A2
A3
B1
B2
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
THE NEW SEC SYSTEM
Urban
New SEC System
13.2
12.9
11.6
12.6
10.2
7.6
9.8
8.6
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,
and is based on occupation and education of
chief earner
24
20.5
18.2
11.9
6.6
7.9
B1
B2
2.8
A1
6
A2
THE NEW SEC SYSTEM
E1
E2
Rural
New SEC System
22.2
20.1
15.6
12.8
10.7
5.1
0.04
0.4
1.3
A1
A2
A3
2.3
3.2
B1
B2
C1
6.2
C2
D1
D2
E1
E2
E3
Current Rural SEC system

The current rural SEC system has 4 grades,
and is based on education of chief earner and
material used in construction of dwelling
40.3
43
12.3
4.3
R1
THE NEW SEC SYSTEM
R2
R3
R4
7
02
How do we classify
a household
in the new SEC system?
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 dont 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.
THE NEW SEC SYSTEM
RECORDING
The grid
01
Items owned / have access at home
1a
1b
Tick
Electricity Connection
01
Ceiling Fan
02
LPG Stove
03
Two Wheeler
04
Colour TV
05
Refrigerator
06
Washing Machine
07
Personal Computer/ Laptop
08
Car/Jeep/Van
09
Air Conditioner
10
Agricultural Land
11
NUMBER OF STANDARD 11 OWNED
10
Circle
THE NEW SEC SYSTEM
RECORDING
The grid
Chief Earner: Education (Q2)
02
11
No. of
Durables
(TRANSFER
FROM Q1)
Illiterate
Literate
but no
formal
schooling/
SchoolUpto 4
years
School- 5
to 9 years
SSC/ HSC
Some
College
(incl a
Diploma)
but not
Grad
Graduate/
Post
Graduate:
General
Graduate/
Post
Graduate:
Profession
al
None
E3
E2
E2
E2
E2
E1
D2
E2
E1
E1
E1
D2
D2
D2
E1
E1
D2
D2
D1
D1
D1
D2
D2
D1
D1
C2
C2
C2
D1
C2
C2
C1
C1
B2
B2
C2
C1
C1
B2
B1
B1
B1
C1
B2
B2
B1
A3
A3
A3
C1
B1
B1
A3
A3
A2
A2
B1
A3
A3
A3
A2
A2
A2
9+
B1
A3
A3
A2
A2
A1
A1
THE NEW SEC SYSTEM
03
What are
the advantages
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
Its simple - easy to answer, not very time consuming, easy
to classify
13
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. Its not a problem
elsewhere
15
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, IMRBs
Household panel, supplemented by a special survey
17
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
18
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
variables
19
THE NEW SEC SYSTEM
In all we used 34 items: giving weights in

inverse proportion to usage/ownership
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
20
THE NEW SEC SYSTEM
05
What were the
other systems
that we considered?
THE NEW SEC SYSTEM
Weve evaluated many options
Point based system using

education of highest educated
individual, press exposure of
housewife, and ownership of
durables plus other aspects
A system based on and

education of chief earner
and the best type of
consumer durables owned
22
THE NEW SEC SYSTEM
A system based on
occupation and education of
chief earner and the number
of consumer durables
owned
06
Performance
of the new SEC system
THE NEW SEC SYSTEM
PENETRATION
New vs Current system (urban)

New SEC system
Current urban SEC system
Have internet access at home

60
Have internet access at home

60
54
50
50
40
40
30
30
20
20
13
10
19
9
10
0
B1
B2
E1
E2
0
A1
A2
A3
B1
B2
C1
C2
D1
D2
E1
E2
E3
A1
Household subscribe any Newspaper

100
A2
Household subscribe any Newspaper
96
90
100
90
82
80
71
70
54
60
84
80
68
70
50
56
60
50
38
40
30
43
40
30
30
23
15
20
20
12
5
10
13
10
10
0
A1
24
A2
A3
B1
B2
C1
C2
THE NEW SEC SYSTEM
D1
D2
E1
E2
E3
A1
A2
B1
B2
E1
E2
MRUC/Hansa Research IRS 2008 (round 20)
PENETRATION
New vs Current system (urban) (CONTD.)

New SEC system
Current urban SEC system
Receive Cable & Satellite

98
100
90
80
70
60
50
40
30
20
10
0
92
90
85
83
80

100
90
80
70
60
50
40
30
20
10
0
74
49
35
16
5
A1
A2
A3
B1
B2
C1
C2
D1
D2
E1
E2
E3
80
76
69
49
33
A2
B1
B2
E1
E2
Purchased in Past 6 Months - Ketchup / Sauces

80
72
70
70
60
60
53
50
55
50
37
40
30
40
40
23
20
28
30
19
13
10
19
20
7
16
10
E1
E2
0
A1
25
84
58
A1
Purchased in Past 6 Months - Ketchup / Sauces

80
86
A2
A3
B1
B2
C1
C2
THE NEW SEC SYSTEM
D1
D2
E1
E2
E3
A1
A2
B1
B2
MRUC/Hansa Research IRS 2008 (round 20)
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

days
5.8
Own DVD player
6.8
Own Kitchen Sink
8.2
Own - Mobile / Cellular Phone
12.4
Own Telephone
12.6
31.2
Own Pressure cooker
37.0
0
New System
0.2
0.4
0.6
0.8
Gini Values
Benchmark System (MHI)

Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
26
THE NEW SEC SYSTEM
India ( u + r ) (CONTD.)
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
New System
Benchmark System (MHI)
27
THE NEW SEC SYSTEM
0.2
0.4
0.6
0.8
Gini Values
*Purchased in the last 6 months except soft drinks, skin creams and chocolates
27
GINI CO-EFFICIENTS
Urban
Penetration
Own Microwave oven
1.0
1.9
Own PC at home
4.5
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
25.9
60.0
Own Pressure cooker
69.6
0.2
0.4
0.6
0.8
Gini Values
New System
Current System
28
THE NEW SEC SYSTEM
28
GINI CO-EFFICIENTS
Urban (CONTD.)
Penetration
Processed Cheese/Cheese Products

Jam
4.1
8.9
Ketchup / Sauces
15.2
Chocolates
15.4
Instant Noodles
17.4
28.3
Floor Cleaners
30.2
Skin Creams/Lotions
30.6
Toilet Cleaners
32.0
Utensil cleaners
59.9
60.1
Toothpaste
80.8
Shampoo
84.9
0
New System
Current System
29
THE NEW SEC SYSTEM
0.2
0.4
0.6
0.8
Gini Values
29
GINI CO-EFFICIENTS
Rural
Penetration
Own Microwave oven
0.1
0.1
Own PC at home
0.3
1.3
Own Kitchen Sink
2.7
Housewife have read a magazine in the last 7 days
2.8
Own DVD player
2.8
6.6
Own Telephone
7.6
Rural Assets - Table Fan
13.4
18.6
Own Pressure cooker
22.8
Rural Assets - In-house toilet
30.9
0
New System
Current System
30
THE NEW SEC SYSTEM
0.2
0.4
0.6
0.8
Gini Values
30
GINI CO-EFFICIENTS
Rural (CONTD.)
Penetration
Instant Noodles
2.1
Chocolates
2.8
Floor Cleaners
3.5
Toilet Cleaners
6.2
10.4
Utensil cleaners
16.5
Skin Creams/Lotions
17.4
45.3
Toothpaste
47.6
Shampoo
70.8
Biscuits
73.2
0.2
0.4
0.6
0.8
Gini Values
New System
Current System
31
THE NEW SEC SYSTEM
Conclusion
The new SEC system is better than the current

urban system , and much better than the current
rural system
32
THE NEW SEC SYSTEM
PERFORMANCE OF THE SYSTEM
Homogeneity within the grade : India (u + r)

MHI System
Level
Distribution of
Households %
New SEC System
Median LIFE
Inter Quartile
Range (IQR)
Level
Distribution of
Households %
Median LIFE
Inter Quartile
Range (IQR)
0.5
702
186
A1
0.4
804
116
1.5
618
236
A2
1.8
687
150
4.2
514
243
A3
3.2
590
173
3.5
455
236
B1
4.3
494
172
4.7
391
227
B2
5.3
430
164
7.1
347
207
C1
7.5
369
142
11.7
289
178
C2
7.9
319
124
19.3
232
155
D1
11.4
270
117
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

New SEC System
Current SEC System

Level
Median LIFE
Inter Quartile
Range (IQR)
Level
Distribution of
Households %
Median LIFE
Inter Quartile
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
7.9
539
215
A3
7.6
610
147
SEC B2
8.0
467
221
B1
8.6
532
158
SEC C
20.5
408
210
B2
10.2
463
158
C1
12.9
399
136
C2
11.6
347
118
D1
13.2
300
113
D2
12.6
251
100
E1
9.8
194
92
E2
4.7
148
93
E3
2.6
112
80
SEC D
SEC E1
SEC E2
34
Distribution of
Households %
24.0
320
167
11.9
280
155
18.2
212
137
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
35
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
Its 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.
37
THE NEW SEC SYSTEM
Thank You
38
THE NEW SEC SYSTEM

The New SEC System: Socio-Economic Classification-2011

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The New SEC System: Socio-Economic Classification-2011

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MUMBAI.

The New SEC system

THE NEW SEC SYSTEM

new SEC system?

What are the

How was the new SEC system

What are the

THE NEW SEC SYSTEM

of the new SEC system?

What is the new

THE NEW SEC SYSTEM

THE NEW SEC SYSTEM

The new SEC system is used to classify households in India.

list)- owned by the family. The list has 11 items,

THE NEW SEC SYSTEM

India ( urban + rural )

THE NEW SEC SYSTEM

Current Urban SEC system

THE NEW SEC SYSTEM

Current Rural SEC system

THE NEW SEC SYSTEM

Just two questions

SHOW CARD/READ OUT

Do you have a(ITEM) in your home (which is in working condition)?

THE NEW SEC SYSTEM

Items owned / have access at home

Personal Computer/ Laptop

NUMBER OF STANDARD 11 OWNED

THE NEW SEC SYSTEM

THE NEW SEC SYSTEM

THE NEW SEC SYSTEM

More discrimination as compared with current systems

THE NEW SEC SYSTEM

Are there any

THE NEW SEC SYSTEM

There are no serious problems. But

We need to be better prepared to handle minor changes

THE NEW SEC SYSTEM

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,

THE NEW SEC SYSTEM

The building blocks that were available to us

THE NEW SEC SYSTEM

How we arrange the blocks

A scoring system called LIFE; which takes

THE NEW SEC SYSTEM

In all we used 34 items: giving weights in

The basis of measuring the discrimination

THE NEW SEC SYSTEM

What were the

THE NEW SEC SYSTEM

Weve evaluated many options

Point based system using

A system based on and

THE NEW SEC SYSTEM

THE NEW SEC SYSTEM

New vs Current system (urban)

Current urban SEC system

Have internet access at home

Have internet access at home

Household subscribe any Newspaper

Household subscribe any Newspaper