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.

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
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 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.

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
 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

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 In all we used 34 items: giving weights in
variables
inverse proportion to usage/ownership

19 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

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 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

22 THE NEW SEC SYSTEM

 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 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

24 THE NEW SEC SYSTEM MRUC/Hansa Research IRS 2008 (round 20)
PENETRATION
New vs Current system (urban) (CONTD.)
New SEC system Current urban SEC system

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

25 THE NEW SEC SYSTEM 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 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)
26 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)
27 THE NEW SEC SYSTEM 27
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)
28 THE NEW SEC SYSTEM 28
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)
29 THE NEW SEC SYSTEM 29
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)
30 THE NEW SEC SYSTEM 30
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)
31 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

32 THE NEW SEC SYSTEM

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

34 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