Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/108511 
Year of Publication: 
2015
Series/Report no.: 
IAI Discussion Papers No. 231
Publisher: 
Georg-August-Universität Göttingen, Ibero-America Institute for Economic Research (IAI), 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 effect on poverty measures of a uniform transfer to beneficiaries across inclusion rates suggests that the largest poverty effect is attained with very narrow targeting. Hence, we find a trade-off between targeting accuracy and poverty effect.
Subjects: 
targeting
transfers
social assistance
proxy means tests
poverty
ROC-analysis
Latin America
Bolivia
JEL: 
C52
I38
O21
Document Type: 
Working Paper

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