IDEAS home Printed from https://ideas.repec.org/p/een/devpol/1212.html
   My bibliography  Save this paper

Revisiting the relationship between targeting and program performance

Author

Listed:
  • Stephen Howes

    () (Development Policy Centre, Crawford School of Public Policy, The Australian National University)

  • Dung Doan

    (Crawford School of Public Policy, The Australian National University.)

Abstract

An important public policy question is whether improved targeting of public spending will necessarily result in more or more cost-effective poverty reduction. In an important and influential study, Ravallion (2009) shows that targeting measures perform poorly as indicators of the poverty impact and cost- effectiveness of an urban cash transfer program across China’s provinces, and warns on this basis against reliance on assessments of targeting performance to inform policy choices in relation to poverty alleviation programs. The lack of a correlation between targeting and cost-effectiveness in reducing poverty is surprising, as it is unsupported by the theoretical literature and contradicts other empirical work. We suggest that this result arises because the comparison is across programs and income distributions. Through simulations, we confirm that the targeting and poverty performance of different programs, or even the same program, implemented across different distributions might be only weakly or even negatively correlated. But a more relevant, policy-oriented concern is to compare the performance of two or more programs in relation to the same distribution. In this case, we find, again through simulations, that the link between targeting and poverty impact depends on the changes made to the underlying targeting errors, but that there is a strong and positive correlation between targeting performance and cost-effectiveness. When the distribution of interest is different to the distributions in which the targeting performance is observed – that is, when assumptions of external validity are made – the correlation is weaker, but some targeting measures still perform well. Overall, targeting results need to be interpreted with care, but do provide useful information on the cost-effectiveness of transfer programs.

Suggested Citation

  • Stephen Howes & Dung Doan, 2012. "Revisiting the relationship between targeting and program performance," Development Policy Centre Discussion Papers 1212, Development Policy Centre, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:devpol:1212
    as

    Download full text from publisher

    File URL: http://devpolicy.anu.edu.au/pdf/papers/DP_12_-_Revisiting_the_relationship_between_targeting_and_program_performance.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:dau:papers:123456789/4713 is not listed on IDEAS
    2. Florent Bresson, 2010. "A general class of inequality elasticities of poverty," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(1), pages 71-100, March.
    3. Puja Dutta & Stephen Howes & Rinku Murgai, 2010. "Small but effective: India's targeted unconditional cash transfers," ASARC Working Papers 2010-18, The Australian National University, Australia South Asia Research Centre.
    4. David Coady, 2004. "Targeting Outcomes Redux," World Bank Research Observer, World Bank Group, vol. 19(1), pages 61-85.
    5. Emmanuelle Lavallée & Anne Olivier & Laure Pasquier-Doumer & Anne-Sophie Robilliard, 2010. "Poverty alleviation policy targeting: a review of experiences in developing countries," Working Papers DT/2010/10, DIAL (Développement, Institutions et Mondialisation).
    6. Baker, Judy L. & Grosh, Margaret E., 1994. "Poverty reduction through geographic targeting: How well does it work?," World Development, Elsevier, vol. 22(7), pages 983-995, July.
    7. Elbers, Chris & Fujii, Tomoki & Lanjouw, Peter & Ozler, Berk & Yin, Wesley, 2007. "Poverty alleviation through geographic targeting: How much does disaggregation help?," Journal of Development Economics, Elsevier, vol. 83(1), pages 198-213, May.
    8. Anne Epaulard, 2003. "Macroeconomic Performance and Poverty Reduction," IMF Working Papers 03/72, International Monetary Fund.
    9. Kanbur, Ravi & Keen, Michael & Tuomala, Matti, 1994. "Labor Supply and Targeting in Poverty Alleviation Programs," World Bank Economic Review, World Bank Group, vol. 8(2), pages 191-211, May.
    10. Richard Layte & Brian Nolan & Christopher T. Whelan, 2001. "Reassessing Income and Deprivation Approaches to the Measurement of Poverty in the Republic of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 32(3), pages 239-261.
    11. Jonah B. Gelbach & Lant H. Pritchett, 2000. "Indicator targeting in a political economy: Leakier can be better," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 4(2), pages 113-145.
    12. Gelbach Jonah B. & Pritchett Lant, 2002. "Is More for the Poor Less for the Poor? The Politics of Means-Tested Targeting," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-28, July.
    13. Alan Harrison, 1981. "Earnings by Size: A Tale of Two Distributions," Review of Economic Studies, Oxford University Press, vol. 48(4), pages 621-631.
    14. Dorothée Boccanfuso & Bernard Decaluwé & Luc Savard, 2008. "Poverty, income distribution and CGE micro-simulation modeling: Does the functional form of distribution matter?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(2), pages 149-184, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    public policy; targeting; public spending; poverty reduction;

    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
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:devpol:1212. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Macarena Rojas). General contact details of provider: http://edirc.repec.org/data/asanuau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.