Item response theory and the measurement of deprivation: evidence from Luxembourg data

Abstract

Item response theory (IRT) has recently been proposed as a framework to measure deprivation. It allows a latent measure of deprivation to be derived from a set of dichotomous items indicating deprivation, and the determinants of deprivation to be analysed. We investigate further the use of IRT models in the field of deprivation measurement. First, the paper emphasises the importance of item selection and the Mokken Scale Procedure is applied to select the items to be included in the scale of deprivation. Second, we apply the one- and the two-parameter probit IRT models for dichotomous items to two different sets of items, in order to highlight different empirical results. Finally, we introduce a graphical tool, the Item Characteristic Curve (ICC), and analyse the determinants of deprivation in Luxembourg. The empirical illustration is based on the fourth wave of the “Liewen zu Letzebuerg” Luxembourg socioeconomic panel (PSELL-3).