Proxy Means Tests for Targeting Social Programs: Simulations and Speculation

Margaret Grosh

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Poverty, Education, and Child Welfare Income, Poverty, and Inequality Social Policy and Reform Studies

Abstract

. ix Acknowledgments xi I. The Need for a Proxy Means Test 1 Means Tests . 1 Proxy Means Tests 3 II. Exploring the Algorithm through Simulation Experiments 5 Data and Country Descriptions 5 Methodology . 6 Which Variables Are Good Proxies for Income? 9 How Sensitive Are the Results to the Poverty Line? 16 Are the Outcomes Different for Rural and Urban Populations? 17 Do the Outcomes Improve Using Only the Poorest 50 Percent of the Population? 18 Do the Results Vary across Countries? 20 What Effect Does Distortion Have on Outcomes? 21 Summary and Conclusions 22 III. Chile's Program Experience with Proxy Means Tests 23 Basic Description 23 Technical Issues 24 Cost and Administrative Requirements 24 Program Experience with CAS 25 IV. Design Issues in Using Proxy Means Tests 27 Contrasting Scenarios 27 Factors to Consider 27 Annex I. Algorithms Compared 35 Annex II. Full Regression Results 41 References . 47

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1984A Class of Decomposable Poverty Measures

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