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How much do our neighbors really know? The limits of community-based targeting

Author

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  • Trachtman, Carly
  • Permana, Yudistira Hendra
  • Sahadewo, Gumilang Aryo

Abstract

Social assistance programs in developing countries often rely on local community members to identify potential beneficiaries. As community members may observe neighbors’ welfare, their reports may capture transitory shocks better than the proxies typically observable by a centralized policy implementer. To test this, we conduct a lab-style experiment in Central Java, in which participants rank other community members’ welfare, using benchmarks that vary in sensitivity to transitory shocks, and target small cash transfers. We find little evidence that community-held welfare information better reflects transitory shocks and find that targeting decisions mostly depend on perceived differences in overall wealth.

Suggested Citation

  • Trachtman, Carly & Permana, Yudistira Hendra & Sahadewo, Gumilang Aryo, 2026. "How much do our neighbors really know? The limits of community-based targeting," Journal of Development Economics, Elsevier, vol. 178(C).
    • Handle: RePEc:eee:deveco:v:178:y:2026:i:c:s0304387825001063
    DOI: 10.1016/j.jdeveco.2025.103555
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    Keywords

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    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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