Table .: A Spectrum of Targeting Instruments Based on Individual Assessment Data Eligibility Criteria Advantages/Disadvantages Means-testing (MT) Self-reported income and assets Income < Threshold Income ADV: Can be very accurate collected through interviews. Cutoff Level. (especially with verification); also, more responsive to transient changes Verified with certification, Sometimes establish a higher (e.g., in crisis). public information, cutoff level for program DISADV: Administratively “exit.” demanding; challenging with informality; potential for work disincentives. Proxy Means-testing Alternative indicators of living Score = + ßX. ADV: Useful in situations with high α (PMT) standards. degrees of informality; less potential Predicted values can establish for work disincentives; allows Develop models usually with weights and eligibility cutoffs capturing multidimensional aspects Household Surveys to identify (thresholds). of poverty (not just income poverty). indicators that are correlated with poverty + scoring formula. DISADV: Administratively demanding; eligibility criteria may Collect data on indicators need to change regularly as people through interviews and (usually) learn to the system; does not home visits. “game” capture changes quickly (less responsive in crisis). Hybrid Means-testing Combination of the methods Predict incomes using: ADV: Can be very accurate; (HMT) above. Easily measured income optimizes use of information; Imputed incomes (using possible with informality; fewer proxies or other imputation work disincentives; methods) objective/verifiable; responsive to And/or use proxies to changes (e.g., in times of crisis). validate or cross-check DISADV: Administratively data on reported incomes. demanding. Estimated/predicted income < Threshold Cutoff Level. Lindert (2008). Source:
Table .: A Spectrum of Targeting Instruments Based on Individual Assessment Data Eligibility Criteria Advantages/Disadvantages Means-testing (MT) Self-reported income and assets collected through interviews. Verified with certification, public information, Income < Threshold Income Cutoff Level. Sometimes establish a higher cutoff level for program “exit.” ADV: Can be very accurate (especially with verification); also, more responsive to transient changes (e.g., in crisis). DISADV: Administratively demanding; challenging with informality; potential for work disincentives. Proxy Means-testing (PMT) Alternative indicators of living standards. Develop models usually with Household Surveys to identify indicators that are correlated with poverty + scoring formula. Collect data on indicators through interviews and (usually) home visits. Score = α + ßX. Predicted values can establish weights and eligibility cutoffs (thresholds). ADV: Useful in situations with high degrees of informality; less potential for work disincentives; allows capturing multidimensional aspects of poverty (not just income poverty). DISADV: Administratively demanding; eligibility criteria may need to change regularly as people learn to “game” the system; does not capture changes quickly (less responsive in crisis). Hybrid Means-testing (HMT) Combination of the methods above. Predict incomes using: Easily measured income Imputed incomes (using proxies or other imputation methods) And/or use proxies to validate or cross-check data on reported incomes. Estimated/predicted income < Threshold Cutoff Level. ADV: Can be very accurate; optimizes use of information; possible with informality; fewer work disincentives; objective/verifiable; responsive to changes (e.g., in times of crisis). DISADV: Administratively demanding. Source: Lindert (2008).
518470ESW0Whit1te11215091Printshop.docx