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Accuracy and Poverty Impacts of Proxy Means-Tested Transfers: An Empirical Assessment for Bolivia

Author

Listed:
  • Stephan Klasen

    (Georg-August-University Göttingen)

  • Simon Lange

    (Georg-August-University Göttingen)

Abstract
In the absence of reliable and exhaustive income data, Proxy Means Tests (PMTs) are frequently employed as a cost-effective way to identify income-poor beneficiaries of targeted anti-poverty programs. However, their usefulness depends on whether proxies accurately identify the income poor. Based on Receiver Operating Characteristics (ROC)-analysis, we find that PMTs perform poorly in terms of identifying poor households in Bolivian data when transfers are targeted narrowly to the poor but that the true positive rate is highly responsive to increases in the proportion of beneficiaries. Using non-parametric regression-techniques, we show that the resulting leakage can largely be confined to the non-poor close to the poverty line. However, simulating the impact on poverty measures of a uniform transfer to beneficiaries across inclusion rates suggests that the largest poverty impact is attained with very narrow targeting. Hence, the link between targeting accuracy and poverty impact is weak.

Suggested Citation

  • Stephan Klasen & Simon Lange, 2015. "Accuracy and Poverty Impacts of Proxy Means-Tested Transfers: An Empirical Assessment for Bolivia," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 164, Courant Research Centre PEG.
    • Handle: RePEc:got:gotcrc:164
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    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_164.pdf
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    More about this item

    Keywords

    targeting; transfers; social assistance; proxy means tests; poverty; ROC-analysis; Latin America; Bolivia;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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