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Are the welfare losses from imperfect targeting important?

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  • Skoufias, Emmanuel
  • Coady, David P.

Abstract

The authors evaluate the size of the welfare losses from using alternative “imperfect” welfare indicators as substitutes for the conventionally preferred consumption indicator. They find that whereas the undercoverage and leakage welfare indices always suggest substantial losses, and the poverty indices suggest substantial losses for the worst performing indices, their preferred welfare index based on standard welfare theory suggests much smaller welfare losses. They also find that one cannot reject the hypothesis that the welfare losses associated with using the better performing alternative indicators are zero. In the case of their preferred welfare index, this reflects the fact that most of the targeting errors, i.e., exclusion and inclusion errors, are highly concentrated around the poverty line so that the differences in welfare weights between those receiving and not receiving the transfers are insufficient to make a difference to the overall welfare impact.

Suggested Citation

  • Skoufias, Emmanuel & Coady, David P., 2002. "Are the welfare losses from imperfect targeting important?," FCND briefs 125, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:fcndbr:125
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    References listed on IDEAS

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    11. Behrman, Jere R. & Deolalikar, Anil B., 1988. "Health and nutrition," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 14, pages 631-711 Elsevier.
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    Citations

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    Cited by:

    1. Christophe Muller, "undated". "Anti-Poverty Transfers without Riots in Tunisia," Discussion Papers 07/06, University of Nottingham, CREDIT.
    2. Skoufias, Emmanuel & Lindert, Kathy & Shapiro, Joseph, 2010. "Globalization and the Role of Public Transfers in Redistributing Income in Latin America and the Caribbean," World Development, Elsevier, vol. 38(6), pages 895-907, June.
    3. Baris Ucar, 2015. "The Usability of Asset Index as an Indicator of Household Economic Status in Turkey: Comparison with Expenditure and Income Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(3), pages 745-760, April.
    4. repec:dau:papers:123456789/4713 is not listed on IDEAS
    5. Martina Menon & Federico Perali & Eva Sierminska, 2017. "An Efficiency Comparison of Means Testing Tools: Money Metric or Counting Approach?," CHILD Working Papers Series 57 JEL Classification: D1, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    6. Del Rey, Elena & Estevan, Fernanda, 2013. "Conditional cash transfers and education quality in the presence of credit constraints," Economics of Education Review, Elsevier, vol. 34(C), pages 76-84.
    7. MENON Martina & PERALI Federico & SIERMINSKA Eva, 2016. "An Asset-based Indicator of Wellbeing for a Unified Means Testing Tool: Money Metric or Counting Approach?," LISER Working Paper Series 2016-09, LISER.
    8. Dacuycuy, Connie B., 2017. "Energy Consumption, Weather Variability, and Gender in the Philippines: A Discrete/Continuous Approach," Discussion Papers DP 2017-06, Philippine Institute for Development Studies.
    9. Zeller, Manfred & Sharma, Manohar & Henry, Carla & Lapenu, Cecile, 2006. "An operational method for assessing the poverty outreach performance of development policies and projects: Results of case studies in Africa, Asia, and Latin America," World Development, Elsevier, vol. 34(3), pages 446-464, March.
    10. Dacuycuy, Connie B., 2016. "Weather Events and Welfare in the Philippine Households," Discussion Papers DP 2016-34, Philippine Institute for Development Studies.
    11. Christophe Muller, "undated". "Anti-Poverty Transfers and Spatial Prices in Tunisia," Discussion Papers 08/13, University of Nottingham, CREDIT.
    12. Christophe MULLER & Sami BIBI, 2008. "Focused Transfer Targeting against Poverty Evidence from Tunisia," THEMA Working Papers 2008-37, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    13. Dacuycuy, Connie B., 2016. "Weather Events and Welfare in the Philippine Households," Research Paper Series DP 2016-34, Philippine Institute for Development Studies.
    14. Brent Robert J., 2013. "A cost-benefit framework for evaluating conditional cash-transfer programs," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(2), pages 159-180, August.
    15. repec:eee:joecag:v:9:y:2017:i:c:p:111-121 is not listed on IDEAS
    16. Christophe Muller & Sami Bibi, 2010. "Refining Targeting against Poverty Evidence from Tunisia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(3), pages 381-410, June.
    17. Stephan Klasen & Simon Lange, 2016. "How Narrowly Should Anti-poverty Programs Be Targeted? Simulation Evidence from Bolivia and Indonesia," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 213, Courant Research Centre PEG.

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