Item response theory and the measurement of deprivation: Evidence from PSELL-3

Item Response Theory (IRT) has recently been proposed as a framework to measure deprivation. It allows deriving a latent measure of deprivation from a set of dichotomous observed items of deprivation and analyzing determinants of deprivation. We investigate further the use of IRT models in the field of deprivation measurement. Firstly, the paper emphasizes the importance of item selection and the Mokken Scale Procedure is applied in order to select the items to be included in the scale of deprivation. Secondly, we apply the one and the two-parameter probit IRT models for dichotomous items on 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 Luxembourg socioeconomic panel ?Liewen zu Lëtzebuerg? (PSELL-3).