How to target the poor?
rdan
Several other conferences are happening elsewhere in the world, but with less fanfare than in Pittsburgh, both in media coverage and police activity. We do forget the ‘smaller’ issues of distibution of goods, so here is a reminder.
How can governments and aid agencies target the poorest? Some use detailed means tests, measuring assets and incomes. Others let the community decide for themselves. The first seems vulnerable to error and misrepresentation, the second to manipulation by elites.
One of the papers I’m most looking forward to at BREAD: a horse race between the means test and participatory methods.
When poverty is defined using per-capita expenditure and the common PPP$2 per day threshold, we find that community-based targeting performs worse in identifying the poor than proxy-means tests, particularly near the threshold. This worse performance does not appear to be due to elite capture.
Instead, communities appear to be systematically using a different concept of poverty: the results of community-based methods are more correlated with how individual community members rank each other and with villagers’ self-assessments of their own status. Consistent with this, community-based methods result in higher satisfaction with beneficiary lists and the targeting process.
Kharris clarifies the report in comments:
The “Target the Poor” study is based on experience in Indonesia, which helps to remind us (I hope) that not all policy solutions can be drawn from a US/Developed World context. Do we know that Indonesia has an income tax system that can stand up to the rigors of a reverse tax? Will the money arrive? No direct deposit for the target group. No bank account. Some may not live in a very monetized economy. A tax-based assistance program is better, I’d think, for the urban poor than the rural poor.
From the Into – “In developing countries, most potential recipients work in the informal sector and lack verifiable records of their earnings.” Tough to offer a reverse tax in such cases.
A separate note – the study has to do with delivery, not dialectic. The assumption is that society is a given, and that the decision to help the poor has been made. Now, how best to go about it?