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Are the Welfare Losses from Imperfect Targeting Important?

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  • EMMANUEL SKOUFIAS
  • DAVID P. COADY

Abstract

We quantify and compare the size of the welfare losses arising from the use of alternative 'imperfect' welfare indicators as substitutes for the conventionally preferred consumption indicator. We find that the size of the welfare losses associated with different indicators varies considerably. An asset-based index and the share of food as targeting indicators were found to have the highest welfare losses relative to all other targeting indicators examined. Our preferred welfare index implies that the losses from the two best targeting indicators (i.e. reported expenditures and reported income) are statistically significant but very low (less than 5%). Copyright (c) The London School of Economics and Political Science 2007.

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 74 (2007)
Issue (Month): 296 (November)
Pages: 756-776

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Handle: RePEc:bla:econom:v:74:y:2007:i:296:p:756-776

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  1. Glewwe, Paul & van der Gaag, Jacques, 1990. "Identifying the poor in developing countries: Do different definitions matter?," World Development, Elsevier, vol. 18(6), pages 803-814, June.
  2. Ahmad,Etisham & Stern,Nicholas, 1991. "The Theory and Practice of Tax Reform in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521265638.
  3. Deaton, A. & Zaidi, S., 1999. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," Papers 192, Princeton, Woodrow Wilson School - Development Studies.
  4. Ravallion, Martin, 1989. "Land-contingent poverty alleviation schemes," World Development, Elsevier, vol. 17(8), pages 1223-1233, August.
  5. Giovanni Andrea Cornia & Frances Stewart, 1993. "Two errors of targeting," Journal of International Development, John Wiley & Sons, Ltd., vol. 5(5), pages 459-496, 09.
  6. Chaudhuri, Shubham & Ravallion, Martin, 1994. "How well do static indicators identify the chronically poor?," Journal of Public Economics, Elsevier, vol. 53(3), pages 367-394, March.
  7. Subramanian, Shankar & Deaton, Angus, 1996. "The Demand for Food and Calories," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 133-62, February.
  8. Bouis, Howarth E., 1994. "Agricultural technology and food policy to combat iron deficiency in developing countries," FCND discussion papers 1, International Food Policy Research Institute (IFPRI).
  9. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
  10. Schady, Norbert R., 2000. "Picking the poor : indicators for geographic targeting in Peru," Policy Research Working Paper Series 2477, The World Bank.
  11. Behrman, Jere R. & Deolalikar, Anil B., 1988. "Health and nutrition," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 14, pages 631-711 Elsevier.
  12. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989 Elsevier.
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Cited by:
  1. Christophe Muller, 2008. "Anti-Poverty Transfers without Riots in Tunisia," IDEP Working Papers 0801, Institut d'economie publique (IDEP), Marseille, France, revised Mar 2008.
  2. Christophe MULLER and Sami BIBI, 2008. "Focused Transfer Targeting against Poverty Evidence from Tunisia," THEMA Working Papers 2008-37, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  3. Elena Del Rey & Fernanda Estevan, 2011. "Conditional Cash Transfers and Education Quality in the Presence of Credit Constraints," Working Papers 1108E, University of Ottawa, Department of Economics.
  4. Lavallée, Emmanuelle & Olivier, Anne & Pasquier-Doumer, Laure & Robilliard, Anne-Sophie, 2010. "Poverty alleviation policy targeting: a review of experiences in developing countries," Economics Papers from University Paris Dauphine 123456789/4713, Paris Dauphine University.
  5. Skoufias, Emmanuel & Lindert, Kathy & Shapiro, Joseph, 2009. "Globalization and the Role of Public Transfers in Redistributing Income in Latin America and the Caribbean," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Christophe Muller, . "Anti-Poverty Transfers and Spatial Prices in Tunisia," Discussion Papers 08/13, University of Nottingham, CREDIT.
  7. Zeller, Manfred & Sharma, Manohar & Henry, Carla & Lapenu, Cecile, 2006. "An operational method for assessing the poverty outreach performance of development policies and projects: Results of case studies in Africa, Asia, and Latin America," World Development, Elsevier, vol. 34(3), pages 446-464, March.

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