Urbanisation brings with it rapid socio-economic change with volatile livelihoods and unstable ownership of assets. Yet, current measures of wealth are based predominantly on static livelihoods found in rural areas. We sought to assess the extent to which seven common measures of wealth appropriately capture vulnerability to poverty in urban areas. We then sought to develop a measure that captures the characteristics of one urban area in Nepal. We collected and analysed data from 1,180 households collected during a survey conducted between November 2017 and January 2018 and designed to be representative of the Kathmandu valley. A separate survey of a sub set of households was conducted using participatory qualitative methods in slum and non-slum neighbourhoods. A series of currently used indices of deprivation were calculated from questionnaire data. We used bivariate statistical methods to examine the association between each index and identify characteristics of poor and non-poor. Qualitative data was used to identify characteristics of poverty from the perspective of urban poor communities which were used to construct an Urban Poverty Index that combined asset and consumption focused context specific measures of poverty that could be proxied by easily measured indicators as assessed through multivariate modelling. We found a strong but not perfect association between each measure of poverty. There was disagreement when comparing the consumption and deprivation index on the classification of 19% of the sample. Choice of short-term monetary and longer-term capital approaches accounted for much of the difference. Those who reported migrating due to economic necessity were most likely to be categorised as poor. A combined index was developed to capture these dimension of poverty and understand urban vulnerability. A second version of the index was constructed that can be computed using a smaller range of variables to identify those in poverty. Current measures may hide important aspects of urban poverty. Those who migrate out of economic necessity are particularly vulnerable. A composite index of socioeconomic status helps to capture the complex nature of economic vulnerability.
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