Working Paper: NBER ID: w15980
Authors: Vivi Alatas; Abhijit Banerjee; Rema Hanna; Benjamin A. Olken; Julia Tobias
Abstract: In developing countries, identifying the poor for redistribution or social insurance is challenging because the government lacks information about people's incomes. This paper reports the results of a field experiment conducted in 640 Indonesian villages that investigated two main approaches to solving this problem: proxy-means tests, where a census of hard-to-hide assets is used to predict consumption, and community-based targeting, where villagers rank everyone on a scale from richest to poorest. When poverty is defined using per-capita expenditure and the common PPP$2 per day threshold, we find that community-based targeting performs worse in identifying the poor than proxy-means tests, particularly near the threshold. This worse performance does not appear to be due to elite capture. Instead, communities appear to be using a different concept of poverty: the results of community-based methods are more correlated with how individual community members rank each other and with villagers' self-assessments of their own status than per-capita expenditure. Consistent with this, the community-based methods result in higher satisfaction with beneficiary lists and the targeting process.
Keywords: targeting; poverty; Indonesia; field experiment; community-based targeting; proxy means testing
JEL Codes: I38; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Community-based targeting (CBT) (R23) | Mistargeting rates (C52) |
| Proxy means tests (PMT) (C12) | Mistargeting rates (C52) |
| Community-based targeting (CBT) (R23) | Community satisfaction (I31) |
| Mistargeting rates (C52) | Community satisfaction (I31) |
| Community-based targeting (CBT) (R23) | Alignment with local perceptions of welfare (I31) |
| Community rankings (R23) | Individual self-assessments (C91) |
| Community rankings (R23) | Per capita expenditures (H59) |
| Participation of local elites in ranking process (D79) | Mistargeting rates (C52) |