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Refining Targeting against Poverty Evidence from Tunisia

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  • Muller, Christophe
  • Bibi, Sami

Abstract

This paper introduces a new methodology to target direct transfers against poverty. Our method is based on estimation methods that focus on the poor. Using data from Tunisia, we estimate ‘focused’ transfer schemes that highly improve anti-poverty targeting performances. Post-transfer poverty can be substantially reduced with the new estimation method. In terms of P2, the most popular axiomatically valid poverty indicator, moving from 1.30, the level reached under subsidies, to 0.36, the level reached with the best OLS method, costs about 2.9 percent of GDP. An additional reduction down to 0.25, that is another 30 percent reduction in poverty, requires only a few hours of statistician work. Finally, the obtained levels of under-coverage of the poor is so low that ‘proxy-means’ focused transfer schemes becomes a realistic alternative to price subsidies, likely to avoid social unrest.

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Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/4335.

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Date of creation: 2010
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Publication status: Published in Oxford Bulletin of Economics and Statistics, 2010, Vol. 72, no. 3. pp. 381-410.Length: 29 pages
Handle: RePEc:dau:papers:123456789/4335

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Keywords: Transfers; Poverty; Targeting;

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  1. Powell, James L., 1986. "Censored regression quantiles," Journal of Econometrics, Elsevier, vol. 32(1), pages 143-155, June.
  2. Bibi, Sami & Duclos, Jean-Yves, 2007. "Equity and policy effectiveness with imperfect targeting," Journal of Development Economics, Elsevier, vol. 83(1), pages 109-140, May.
  3. Stephen Pudney, . "On Some Statistical Methods for Modelling the Incidence of Poverty," Discussion Papers in Public Sector Economics 97/1, Department of Economics, University of Leicester.
  4. Bourguignon, Francois & Fields, Gary, 1997. "Discontinuous losses from poverty, generalized P[alpha] measures, and optimal transfers to the poor," Journal of Public Economics, Elsevier, vol. 63(2), pages 155-175, January.
  5. Park, Albert & Wang, Sangui & Wu, Guobao, 2002. "Regional poverty targeting in China," Journal of Public Economics, Elsevier, vol. 86(1), pages 123-153, October.
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  7. Moshe Buchinsky & Jinyong Hahn, 1998. "An Alternative Estimator for the Censored Quantile Regression Model," Econometrica, Econometric Society, vol. 66(3), pages 653-672, May.
  8. Deaton, A., 1988. "Quality, Quantity, And Spatial Variation Of Price," Papers 30, World Bank - Living Standards Measurement.
  9. Christophe Muller, 2002. "Censored Quantile Regressions of Chronic and Transient Seasonal Poverty in Rwanda," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 11(4), pages 503-541, December.
  10. Besley, Timothy J & Kanbur, S M Ravi, 1988. "Food Subsidies and Poverty Alleviation," Economic Journal, Royal Economic Society, vol. 98(392), pages 701-19, September.
  11. Martin Ravallion & Gaurav Datt, 1995. "Is Targeting Through a Work Requirement Efficient? Some Evidence for Rural India," Development Research Unit Working Paper Series archive-41, Monash University, Department of Economics.
  12. Pranab Bardhan & Dilip Mookherjee, 2003. "Pro-Poor Targeting and Accountability of Local Governments in West Bengal," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-138, Boston University - Department of Economics.
  13. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, vol. 108(450), pages 1330-61, September.
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  16. Muller, Christophe, 2002. "Prices and living standards: evidence for Rwanda," Journal of Development Economics, Elsevier, vol. 68(1), pages 187-203, June.
  17. de Janvry, Alain & Finan, Frederico & Sadoulet, Elisabeth & Vakis, Renos, 2006. "Can conditional cash transfer programs serve as safety nets in keeping children at school and from working when exposed to shocks?," Journal of Development Economics, Elsevier, vol. 79(2), pages 349-373, April.
  18. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
  19. Datt, Gaurav & Ravallion, Martin, 1994. "Transfer Benefits from Public-Works Employment: Evidence for Rural India," Economic Journal, Royal Economic Society, vol. 104(427), pages 1346-69, November.
  20. Slesnick, Daniel T, 1996. "Consumption and Poverty: How Effective Are In-Kind Transfers?," Economic Journal, Royal Economic Society, vol. 106(439), pages 1527-45, November.
  21. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April.
  22. Bigman, David & Srinivasan, P. V., 2002. "Geographical targeting of poverty alleviation programs: methodology and applications in rural India," Journal of Policy Modeling, Elsevier, vol. 24(3), pages 237-255, June.
  23. Besley, Timothy, 1990. "Means Testing versus Universal Provision in Poverty Alleviation Programmes," Economica, London School of Economics and Political Science, vol. 57(225), pages 119-29, February.
  24. Schady, Norbert R, 2002. "Picking the Poor: Indicators for Geographic Targeting in Peru," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 417-33, September.
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