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A poor means test? Econometric targeting in Africa

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  • Brown, Caitlin
  • Ravallion, Martin
  • van de Walle, Dominique

Abstract

Proxy-means tests (PMTs) are popular for poverty-targeting with imperfect information. In a widely-used version, a regression for log consumption calibrates a PMT score based on covariates, which is then implemented for targeting out-of-sample. The performance of various PMT methods is assessed using data for nine African countries. Standard PMTs help filter out the non-poor, but exclude many poor people, thus diminishing the impact on poverty. Poverty-focused econometric methods such as using quantile regression generally do better. We also characterize the optimal informationally-feasible solution for poverty targeting and compare it to econometric methods. Even with a budget sufficient to eliminate poverty with full information, none of the targeting methods studied bring the poverty rate below about three-quarters of its initial value. The prevailing methods are particularly deficient in reaching the poorest. A basic-income scheme or transfers using a simple demographic scorecard often do as well, or even better, in reducing poverty.

Suggested Citation

  • Brown, Caitlin & Ravallion, Martin & van de Walle, Dominique, 2018. "A poor means test? Econometric targeting in Africa," Journal of Development Economics, Elsevier, vol. 134(C), pages 109-124.
  • Handle: RePEc:eee:deveco:v:134:y:2018:i:c:p:109-124
    DOI: 10.1016/j.jdeveco.2018.05.004
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    More about this item

    Keywords

    Poverty; Cash transfers; Proxy means test; Targeting; Africa;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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