IDEAS home Printed from https://ideas.repec.org/p/fpr/fcndbr/125.html
   My bibliography  Save this paper

Are the welfare losses from imperfect targeting important?

Author

Listed:
  • Coady, David P.
  • Skoufias, Emmanuel

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

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

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/fcnbr125.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chaudhuri, Shubham & Ravallion, Martin, 1994. "How well do static indicators identify the chronically poor?," Journal of Public Economics, Elsevier, vol. 53(3), pages 367-394, March.
    2. Morley, Samuel & David Coady, 2003. "From Social Assistance to Social Development: Targeted Education Subsidies in Developing Countries," Peterson Institute Press: All Books, Peterson Institute for International Economics, number cgd376, October.
    3. Ravallion, Martin, 1989. "Land-contingent poverty alleviation schemes," World Development, Elsevier, vol. 17(8), pages 1223-1233, August.
    4. Subramanian, Shankar & Deaton, Angus, 1996. "The Demand for Food and Calories," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 133-162, February.
    5. David Coady & Emmanuel Skoufias, 2004. "On the Targeting and Redistributive Efficiencies of Alternative Transfer Instruments," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 11-27, March.
    6. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989, Elsevier.
    7. Ahmad,Etisham & Stern,Nicholas, 1991. "The Theory and Practice of Tax Reform in Developing Countries," Cambridge Books, Cambridge University Press, number 9780521265638, January.
    8. Glewwe, Paul & van der Gaag, Jacques, 1990. "Identifying the poor in developing countries: Do different definitions matter?," World Development, Elsevier, vol. 18(6), pages 803-814, June.
    9. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
    10. Zeller, Manfred, 1994. "Determinants of credit rationing: A study of informal lenders and formal credit groups in Madagascar," World Development, Elsevier, vol. 22(12), pages 1895-1907, December.
    11. Deaton, A. & Zaidi, S., 1999. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," Papers 192, Princeton, Woodrow Wilson School - Development Studies.
    12. Bouis, Howarth E., 1994. "Agricultural technology and food policy to combat iron deficiency in developing countries," FCND discussion papers 1, International Food Policy Research Institute (IFPRI).
    13. Angus Deaton & Salman Zaidi, 2002. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," World Bank Publications, The World Bank, number 14101, April.
    14. Norbert R. Schady, 2002. "Picking the Poor: Indicators for Geographic Targeting in Peru," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 417-433, September.
    15. Bouis, Howarth E., 1994. "Agricultural technology and food policy to combat iron deficiency in developing countries," FCND discussion papers 1, International Food Policy Research Institute (IFPRI).
    16. repec:pri:rpdevs:deaton_zaidi_consumption is not listed on IDEAS
    17. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Coady, 2006. "The Welfare Returns to Finer Targeting: The Case of The Progresa Program in Mexico," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(2), pages 217-239, May.
    2. Coady, David, 2001. "An evaluation of the distributional power of PROGRESA's cash transfers in Mexico," FCND discussion papers 117, International Food Policy Research Institute (IFPRI).
    3. Skoufias, Emmanuel, 2002. "The sensitivity of calorie-income demand elasticity to price changes: evidence from Indonesia," FCND discussion papers 141, International Food Policy Research Institute (IFPRI).
    4. Coady, David & Grosh, Margaret & Hoddinott, John F., 2002. "Targeting outcomes redux," FCND briefs 144, International Food Policy Research Institute (IFPRI).
    5. Tarp, Finn & Simler, Kenneth & Matusse, Cristina & Heltberg, Rasmus & Dava, Gabriel, 2002. "The Robustness of Poverty Profiles Reconsidered," Economic Development and Cultural Change, University of Chicago Press, vol. 51(1), pages 77-108, October.
    6. Hoddinott, John F. & Yohannes, Yisehac, 2002. "Dietary diversity as a food security indicator," FCND discussion papers 136, International Food Policy Research Institute (IFPRI).
    7. Coady, David & Grosh, Margaret & Hoddinott, John F., 2002. "Targeting outcomes redux," FCND briefs 144, International Food Policy Research Institute (IFPRI).
    8. Tarp, Finn & Simler, Kenneth & Matusse, Cristina & Heltberg, Rasmus & Dava, Gabriel, 2002. "The Robustness of Poverty Profiles Reconsidered," Economic Development and Cultural Change, University of Chicago Press, vol. 51(1), pages 77-108, October.
    9. Coady, David & Harris, Rebecca Lee, 2001. "Evaluating transfer programs within a general equilibrium framework," FCND discussion papers 110, International Food Policy Research Institute (IFPRI).
    10. Ahmed, Akhter U. & Bouis, Howarth E., 2002. "Weighing what's practical: proxy means tests for targeting food subsidies in Egypt," Food Policy, Elsevier, vol. 27(5-6), pages 519-540.
    11. Popkin, Barry M. & Horton, Susan & Kim, Soowon, 2001. "The nutritional transition and diet-related chronic diseases in Asia: implications for prevention," FCND discussion papers 105, International Food Policy Research Institute (IFPRI).
    12. Ruel, Marie T. & de la Briere, Benedicte & Hallman, Kelly & Quisumbing, Agnes R. & Coj de Salazar, Nora, 2002. "Does subsidized childcare help poor working women in urban areas? evaluation of a government-sponsored program in Guatemala City," FCND discussion papers 131, International Food Policy Research Institute (IFPRI).
    13. Haddad, Lawrence J. & Alderman, Harold & Appleton, Simon & Song, Lina & Yohannes, Yisehac, 2002. "Reducing child undernutrition: how far does income growth take us?," FCND briefs 137, International Food Policy Research Institute (IFPRI).
    14. Haddad, Lawrence & Maluccio, John A, 2003. "Trust, Membership in Groups, and Household Welfare: Evidence from KwaZulu-Natal, South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 573-601, April.
    15. Haddad, Lawrence J. & Alderman, Harold & Appleton, Simon & Song, Lina & Yohannes, Yisehac, 2002. "Reducing child undernutrition: how far does income growth take us?," FCND discussion papers 137, International Food Policy Research Institute (IFPRI).
    16. Haddad, Lawrence J. & Adato, Michelle, 2001. "How effectively do public works programs transfer benefits to the poor? evidence from South Africa," FCND discussion papers 108, International Food Policy Research Institute (IFPRI).
    17. Skoufias, Emmanuel & Parker, Susan W., 2002. "Labor market shocks and their impacts on work and schooling: evidence from urban Mexico," FCND discussion papers 129, International Food Policy Research Institute (IFPRI).
    18. del Ninno, Carlo & Dorosh, Paul A., 2002. "In-kind transfers and household food consumption: implications for targeted food programs in Bangladesh," FCND discussion papers 134, International Food Policy Research Institute (IFPRI).
    19. Popkin, Barry M. & Horton, Susan & Kim, Soowon, 2001. "The nutritional transition and diet-related chronic diseases in Asia: implications for prevention," FCND discussion papers 105, International Food Policy Research Institute (IFPRI).
    20. Arimond, Mary & Ruel, Marie T., 2002. "Progress in developing an infant and child feeding index: an example using the Ethiopia Demographic and Health Survey 2000," FCND discussion papers 143, International Food Policy Research Institute (IFPRI).

    More about this item

    Keywords

    ;
    ;
    ;

    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:fpr:fcndbr:125. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ifprius.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.