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Operational Poverty Targeting In Peru ? Proxy Means Testing With Non-Income Indicators

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  • Julia Johannsen

    () (Department of Agricultural Economics and Rural Development, University of Goettingen, Germany)

Abstract

he measurement of per capita daily expenditures relative to a monetary poverty line, also known as ?sophisticated means testing?, is the most widely used approach to poverty assessment. However, it is reliant on the implementation of time- and cost-intensive household surveys. Hence, for operational purposes, it is not an effective method for targeting poor households with development services. This paper shows how to identify an alternative poverty assessment tool for Peru. The tool consists of a maximum of 15 indicators that are powerful predictors of per capita household expenditures. The indicators were selected out of a wide range of indicators used to gauge different poverty dimensions. The resultant poverty classification of households is based on the ?percent point function? of the predicted expenditures and validated by various accuracy measures and their confidence intervals. The results reveal that the 15 indicators correctly identify over 81 per cent of poor households when the national poverty line is employed as the benchmark. Thus, this tool might be considered, under certain conditions, as an alternative to the collection of detailed expenditure data. It offers an operational instrument for fairly accurate ex-ante poverty targeting and ex-post impact assessments.

Suggested Citation

  • Julia Johannsen, 2006. "Operational Poverty Targeting In Peru ? Proxy Means Testing With Non-Income Indicators," Working Papers 30, International Policy Centre for Inclusive Growth.
  • Handle: RePEc:ipc:wpaper:30
    as

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    File URL: http://www.ipc-undp.org/pub/IPCWorkingPaper30.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mohamed Bakhshoodeh, 2013. "Proxy Means Tests for Targeting Subsidies Scheme in Iran," Working Papers 795, Economic Research Forum, revised Nov 2013.
    2. Edig, Xenia van & Schwarze, Stefan & Zeller, Manfred, 0. "Poverty Assessment by Proxy-Means Tests: Are Indicator-Based Estimations Robust over Time? A Study from Central Sulawesi, Indonesia," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 52.
    3. Jehu-Appiah, Caroline & Aryeetey, Genevieve & Spaan, Ernst & Agyepong, Irene & Baltussen, Rob, 2010. "Efficiency, equity and feasibility of strategies to identify the poor: An application to premium exemptions under National Health Insurance in Ghana," Health Policy, Elsevier, vol. 95(2-3), pages 166-173, May.

    More about this item

    Keywords

    Poverty targeting; Targeting accuracy; Expenditure predictions; Percent point function; Latin America; Peru;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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