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Targeting the Poor: Evidence from a Field Experiment in Indonesia.

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Area of Science:

  • Development Economics
  • Social Policy
  • Poverty Alleviation

Background:

  • Targeting mechanisms are crucial for effective poverty alleviation programs.
  • Different approaches, including proxy-means tests (PMT) and community-based methods, exist for identifying the poor.
  • Understanding the nuances of these targeting methods in diverse contexts is essential.

Purpose of the Study:

  • To compare the effectiveness of proxy-means tests (PMT), community targeting, and a hybrid approach in identifying the poor in Indonesian villages.
  • To analyze the reasons behind any performance differences, considering factors beyond elite capture.
  • To assess the impact of targeting methods on participant satisfaction.

Main Methods:

  • An experiment was conducted across 640 Indonesian villages.
  • Three targeting approaches were evaluated: PMT (using assets to predict consumption), community targeting (villager rankings), and a hybrid model.
  • Poverty was defined using a per-capita consumption threshold of PPP$2.

Main Results:

  • Community targeting and the hybrid approach performed slightly worse than PMT in accurately identifying the poor based on the defined poverty line.
  • The performance difference was not substantial enough to significantly alter typical program poverty outcomes.
  • Elite capture did not explain the observed targeting hiệu quả; communities seemed to employ a different understanding of poverty.
  • Community targeting led to higher levels of participant satisfaction.

Conclusions:

  • While PMT shows slightly better accuracy in identifying the poor using standard economic metrics, community targeting offers a valuable alternative due to higher participant satisfaction.
  • The findings suggest that local perceptions of poverty can differ from externally defined economic measures.
  • Policy implications favor a nuanced approach, potentially integrating elements of both economic and social-based targeting for improved program effectiveness and acceptance.