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Poverty targeting in public programs: A comparison of alternative nonparametric methods

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  • Isha Dewan

    ()
    (Indian Statistical Institute, New Delhi)

  • Rohini Somanathan

    ()
    (Indian Statistical Institute, New Delhi)

Abstract

Very poor households may be excluded from public programs intended for their benefit for a variety of reasons as lack information, a permanent residence or membershiip in social networks. We are interested in methods of testing for such exclusion based on independently drawn samples of program participants and non-participants. We discuss three alternative nonparametric procedures; sign tests, tests for stochastic dominance and a test for distribution crossing. In the cases where there is a poverty threshold below which program participation is difficult, our simulation results suggests that the last of these test procedures is the most powrful. we apply this test to data from a microfinance program in India and find evidence that the poorest households in the area were largely outside the program.

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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 04-16.

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Length: 28 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:ind:isipdp:04-16

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  1. Kaur, Amarjot & Prakasa Rao, B.L.S. & Singh, Harshinder, 1994. "Testing for Second-Order Stochastic Dominance of Two Distributions," Econometric Theory, Cambridge University Press, vol. 10(05), pages 849-866, December.
  2. James J. Heckman & Jeffrey A. Smith, 2004. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 243-298, April.
  3. Beach, Charles M & Davidson, Russell, 1983. "Distribution-Free Statistical Inference with Lorenz Curves and Income Shares," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 723-35, October.
  4. Davidson, Russell & Duclos, Jean-Yves, 1998. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," Cahiers de recherche 9805, Université Laval - Département d'économique.
  5. Anderson, Gordon, 1996. "Nonparametric Tests of Stochastic Dominance in Income Distributions," Econometrica, Econometric Society, vol. 64(5), pages 1183-93, September.
  6. Christina Paxson & Norbert R. Schady, 2002. "The Allocation and Impact of Social Funds: Spending on School Infrastructure in Peru," World Bank Economic Review, World Bank Group, vol. 16(2), pages 297-319, August.
  7. Foster, James E & Shorrocks, Anthony F, 1988. "Poverty Orderings," Econometrica, Econometric Society, vol. 56(1), pages 173-77, January.
  8. Schmid, Friedrich & Trede, Mark, 1998. "A Kolmogorov-type test for second-order stochastic dominance," Statistics & Probability Letters, Elsevier, vol. 37(2), pages 183-193, February.
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Cited by:
  1. Jean-Marie Baland & Rohini Somanathan & Lore Vandewalle, 2011. "Socially Disadvantaged Groups and Microfinance in India," Working Papers 1117, University of Namur, Department of Economics.

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