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Operational Poverty Targeting In Peru ? Proxy Means Testing With Non-Income Indicators

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  • Julia Johannsen

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    (Department of Agricultural Economics and Rural Development, University of Goettingen, Germany)

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    Abstract

    he measurement of per capita daily expenditures relative to a monetary poverty line, also known as ?sophisticated means testing?, is the most widely used approach to poverty assessment. However, it is reliant on the implementation of time- and cost-intensive household surveys. Hence, for operational purposes, it is not an effective method for targeting poor households with development services. This paper shows how to identify an alternative poverty assessment tool for Peru. The tool consists of a maximum of 15 indicators that are powerful predictors of per capita household expenditures. The indicators were selected out of a wide range of indicators used to gauge different poverty dimensions. The resultant poverty classification of households is based on the ?percent point function? of the predicted expenditures and validated by various accuracy measures and their confidence intervals. The results reveal that the 15 indicators correctly identify over 81 per cent of poor households when the national poverty line is employed as the benchmark. Thus, this tool might be considered, under certain conditions, as an alternative to the collection of detailed expenditure data. It offers an operational instrument for fairly accurate ex-ante poverty targeting and ex-post impact assessments.

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    Bibliographic Info

    Paper provided by International Policy Centre for Inclusive Growth in its series Working Papers with number 30.

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    Length: 20
    Date of creation: Oct 2006
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    Publication status: Published by UNDP - International Poverty Centre, October 2006, pages 1-20
    Handle: RePEc:ipc:wpaper:30

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    Keywords: Poverty targeting; Targeting accuracy; Expenditure predictions; Percent point function; Latin America; Peru;

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    Cited by:
    1. Jehu-Appiah, Caroline & Aryeetey, Genevieve & Spaan, Ernst & Agyepong, Irene & Baltussen, Rob, 2010. "Efficiency, equity and feasibility of strategies to identify the poor: An application to premium exemptions under National Health Insurance in Ghana," Health Policy, Elsevier, Elsevier, vol. 95(2-3), pages 166-173, May.
    2. Edig, Xenia van & Schwarze, Stefan & Zeller, Manfred, 0. "Poverty Assessment by Proxy-Means Tests: Are Indicator-Based Estimations Robust over Time? A Study from Central Sulawesi, Indonesia," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, Humboldt-Universität zu Berlin, vol. 52.

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