MUMBAI.

MAY 3, 2011

SOCIO-ECONOMIC CLASSIFICATION-2011

The New SEC system

THENEWSECSYSTEM

What is the
new SEC system?
How do we classify
a household
in the new SEC system?

What are the

advantages/ drawbacks of the new SEC system?

How was the new SEC system created?

What are the

other systems
that we considered?

What is
the performance
of the new SEC system?

Conclusion
01 02
 03 04

05

06 07

THENEWSECSYSTEM
01 3
What is the new
 SEC system? THENEWSECSYSTEM

THE NEW SEC SYSTEM

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

It’s 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
THENEWSECSYSTEM
DISTRIBUTION OF

India (
HOUSEHOLDS

urban + rural )

New SEC System 18.4

14.7 15.4

11.4
9.7

7.5 7.9

5.3
0.41.83.24.3
 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

THENEWSECSYSTEM
5
DISTRIBUTION OF

HOUSEHOLDS Urban 1.1

New SEC System

13.2
12.6

9.8
12.9
11.6
7.68.6 10.2
5.1 4.7
2.6
 A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 Current Urban SEC system

The current urban SEC 24

system has 8 grades,
and is based on
occupation and 6.6 7.9 8
education of chief 2.8
earner 11.9
18.2
20.5

A1 A2 B1 B2 C D E1 E2 T H E N E W S E C S Y S T E M
6
DISTRIBUTION OF

HOUSEHOLDS Rural
New SEC System

15.6
0.04 0.4 1.3 2.3 3.2
10.7
5.1 6.2
12.8

22.2
20.1

A1 A2 A3 B1 B2 C1 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 4.3
earner and material used in construction of 40.343
dwelling

12.3

R1 R2 R3 R4
THENEWSECSYSTEM
7

02

How do we classify
a household
in the new SEC system?
 THENEWSECSYSTEM
8

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 don’t 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.

THENEWSECSYSTEM 9

RECORDING

The grid
Washing Machine

Personal Computer/ Laptop

01 Car/Jeep/Van

1a Items owned / have access at home AirConditioner

Electricity Connection

Ceiling Fan
1b Agricultural Land
LPG Stove
NUMBER OF STANDARD 11 OWNED
Two Wheeler

ColourTV

Refrigerator

10 T H E N E W S E C S Y S T E M
RECORDING Literate School- 5 SSC/ HSC D2 D1 D1

The grid but no

formal
to 9 years
C2 C2 C1
schooling/
School C1 C1 B2
Upto 4 4
3
02 years B2 B2 B1
E2
E2
2 B1 B1 A3
No. of
E2 A3 A3 A3

E1 E1 E1

Chief Earner: Education (Q2) E1 D2 D2 Graduate/ Post

(TRANSFER FROM Q1) Graduate: Profession al

Durables
Illiterate

1 7 None E3 D2 1 E2 D2 2 E1 D1 3 D2 C2 4 D1 B2 5 C2 B1 6 C1 A3 7 C1 A2 8 B1 A2 9 + B1 A3 A3 A2 A2 A1 A1

11 T H E N E W S E C S Y S T E M
 03

What are
the
advantages of the
new SEC system?
 THENEWSECSYSTEM

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

It’s simple - easy to answer, not very time consuming, easy

to classify
 THENEWSEC
SYSTEM

13

03

Are there any

drawbacks
 to the new SEC system?

THENEWSECSYSTEM

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. It’s not a problem
elsewhere
 THENEWSEC
SYSTEM

15

04

How did we go about

creating the new system?
 THENEWSECSYSTEM

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, IMRB’s

Household panel, supplemented by a special
survey
17 T H E N E W S E C S Y S T E M

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 SYSTEM
THENEWSEC

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

19 T H E N E W S E C S Y S T E M

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
THENEWSEC
SYSTEM

20

05
 What were the
other systems
that we considered?

THENEWSECSYSTEM

We’ve evaluated many individual, press exposure of

options

A system based on
Point based system using
education of highest educated
housewife, and ownership of chief earner and the number
durables plus other aspects of consumer durables
occupation and
education of
 owned

A system based on and

education of chief earner

and the “best type” of
consumer durables owned

22 T H E N E W S E C S Y S T E M
06

Performance
of the new SEC system
 THENEWSECSYSTEM
PENETRATION

New vs Current system (urban)

New SEC system Current urban SEC system
Have internet access at home 90
82
60 80
54 68
70
50 54
60
40
50
30 38
40
20 30
13 23
10 15
12
52
00000000 20
0
A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3

Household subscribe any Newspaper

96
100
 20

10

100
90 9
42 1
80 000
70
60 A1 A2 B1 B2 C D E1 E2 Household subscribe

50
40 any Newspaper
30
20 84
10
0
Have internet access at home

5
231
10
0 19
A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3

60

50

40

30 71
 3
56 30

43 13 A1 A2 B1 B2 C D E1 E2
10
MRUC/Hansa Research –IRS 2008 (round 20)
24 T H E N E W S E C S Y S T E M
PENETRATION

New vs Current system (urban) (CONTD.) New SEC system

Current urban SEC system
10
37
0
100
Receive Cable & Satellite 23
90 9892 9085 83 80 19
80 74
70
60
50
40
30
20 49
10
0 35

16
5
1
80
A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3
70
60 Purchased in Past 6 Months -
50
Ketchup / Sauces 72
40
30 139 7 5
53 5 23
20
 Receive Cable & Satellite
100 90 40
86 84 80 76
80 69 28
70
60
50
40
30
20 58
10 49
0 33

80
70 A1 A2 B1 B2 C D E1 E2 Purchased in

60
Past 6 Months - Ketchup /
50
40
Sauces
30
20 19
16
10 97
55 5
0

A1 A2 A3 B1 B2 C1 C2 D1 D2 E1 E2 E3 25 T H E N E W S E C S Y S T E M

A1 A2 B1 B2 C D E1 E2 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

1.6
Own Internet access at home - Through PC / TV
3.5
Own PC at home 5.8
Own Camera (still/ digital)
6.8
Housewife have read a magazine in the last 7 days
Own DVD player 8.2

Own Kitchen Sink 12.4

Own - Mobile / Cellular Phone 12.6

31.2
Own Telephone
37.0
Receive Cable & Satellite
Own Pressure cooker

New System
Benchmark System (MHI)
0.4

0.7
 Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)

0 0.2 0.4 0.6 0.8 1 Gini Values

26 SYSTEM
THENEWSEC
PERFORMANCE ON DISCRIMINATION

India ( u + r ) (CONTD.)
Gini coefficients for New SEC system compared with

benchmark

Penetration
Jam
15.8
Ketchup / Sauces 21.4
Chocolates 29.7
Instant Noodles 49.8
Floor Cleaners 57.7
Toilet Cleaners
75.1
Soft drinks/Fruit Juices
95.8
Skin Creams/Lotions
Utensil cleaners
Fabric whiteners / blues
Toothpaste
Shampoo
Bathing Soaps / Liquid Soaps

New System
Benchmark System (MHI)
3.3
5.3

6.6

6.7
11.6
0 0.2 0.4 0.6 0.8 1 Gini Values
14.1
*Purchased in the last 6 months except soft drinks, skin creams and
 chocolates Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
27 27
THENEWSECSYSTEM
GINI CO-EFFICIENTS

Urban
Gini coefficients for New SEC system compared with
benchmar
k
Penetratio
n

Own Microwave oven

Own Internet access at home - Through PC / TV Own PC at
home
Own Camera (still/ digital)
New System
Housewife have read a magazine in the last 7 days Own DVD
Current System
player THENEWSECSYSTEM
28
Own Kitchen Sink 1.0
Own Telephone 1.9
Own - Mobile / Cellular Phone 4.5
Receive Cable & Satellite
8.5
Own Pressure cooker 12.7

15.7
20.9
23.8

25.9 Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)
28
60.0
69.6

0 0.2 0.4 0.6 0.8 1 Gini Values

GINI CO-EFFICIENTS

Urban (CONTD.)
Gini coefficients for New SEC system compared with benchmark
Penetratio
 n

Processed Cheese/Cheese Products 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

00 0.2 0.2 0.4 0.4 0.6 0.6 0.8 0.8 11 Gini Values

New System
4.1
THENEWSECSYSTEM
*Purchased in the last 6 months except soft drinks, Data Source: MRUC/ Hansa Research - IRS 2008
29 skin creams and chocolates (Round 20) 29
Current System
GINI CO-EFFICIENTS

Rural
Gini coefficients for New SEC system compared with

benchmark
Penetration

Own Microwave oven 0.3

Own Internet access at home - Through PC / TV Own PC at 1.3

home 2.7

Own Camera (still/ digital) 2.8

Own Kitchen Sink 2.8

Housewife have read a magazine in the last 7 days Own DVD 6.6
player 7.6

Own - Mobile / Cellular Phone 13.4

Own Telephone 18.6

22.8
Rural Assets - Table Fan
30.9
Receive Cable & Satellite
Own Pressure cooker
Rural Assets - In-house toilet

New System
Current System
0.1
0.1
 Data Source: MRUC/ Hansa Research - IRS 2008 (Round 20)

0 0.2 0.4 0.6 0.8 1 Gini Values

30 30
THENEWSECSYSTEM
GINI CO-EFFICIENTS

Rural (CONTD.)
Gini coefficients for New SEC system compared with benchmark
Penetratio
n

Instant Noodles Chocolates

 Floor Cleaners 10.4
Toilet Cleaners 16.5
Soft drinks/Fruit Juices Utensil cleaners 17.4
Skin Creams/Lotions Fabric whiteners / blues Toothpaste 45.3
Shampoo 47.6
Biscuits 70.8
2.1
73.2
2.8
0 0.2 0.4 0.6 0.8 1 Gini Values
3.5

6.2
New System
*Purchased in the last 6 months except soft drinks,
Current System skin creams and chocolatesData Source: MRUC/
THENEWSECSYSTEM Hansa Research - IRS 2008 (Round 20)
31
PERFORMANCE ON DISCRIMINATION

Conclusion

The new SEC system is better than the current

 urban system , and much better than the current
rural system

32 T H E N E W S E C S Y S T E M
PERFORMANCE OF THE SYSTEM

Homogeneity within the grade : India (u + r)MHI

System New SEC System LevelDistribution of
Households %Median LIFEInter Quartile Range (IQR)

1 0.5 702 186 2 1.5 618 236 3 4.2 514 243 4 3.5 455 236 5 4.7 391 227 6 7.1 347 207 7 11.7
289 178 8 19.3 232 155 9 19.2 181 139 10 13.5 136 110 11 12.9 125 111 12 2.1 95 101 T H E N
EWSECSYSTEM
 LevelDistribution of
Households %Median LIFEInter Quartile Range (IQR)

A1 0.4 804 116 A2 1.8 687 150 A3 3.2 590 173 B1 4.3 494 172 B2 5.3 430 164 C1 7.5 369 142
C2 7.9 319 124 D1 11.4 270 117 D2 14.7 222 106 E1 18.4 164 90 E2 15.4 117 75 E3 9.7 80 65
Median LIFE (Urban + Rural): 220
PERFORMANCE OF THE SYSTEM

Homogeneity within the grade : Urban

IndiaCurrent SEC System New SEC System LevelDistribution of
LevelDistribution of
Households %Median LIFEInter Quartile
Range (IQR)

SEC A1 2.8 702 189 SEC A2 6.6 616 225 SEC B1

7.9 539 215 SEC B2 8.0 467 221 SEC C 20.5 408
34 T H E N E W S E C S Y S T E M
210 SEC D 24.0 320 167 SEC E1 11.9 280 155 SEC Households %Median LIFEInter Quartile Range
(IQR)
E2 18.2 212 137
A1 1.1 807 106 A2 5.1 704 132 A3 7.6 610 147
B1 8.6 532 158 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
 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 T H E N E W S E C S Y S T E M
 07

Conclusion

THENEWSECSYSTEM
 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

It’s 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 T H E N E W S E C S Y S T E M
 Thank You
38 T H E N E W S E C S Y S T E M