Key Concepts and Practice of Targeting – what works?

1. Key Concepts and Practice of Targeting – what works? The World Bank: March 20th, 2018 By Victor Sulla (Adopted from P. Leite E.D. Tesliuc)

2. Features of Social Protection systems in middle Income countries The World Bank

3. A good targeting system provides… The World Bank

4. Targeting methods The World Bank

5. Geographical targeting • When location is an important determinant of poverty • Macro regions • Micro-area poverty maps: based on census and household surveys • Can be important when administrative capacity is low • Often used as a first step: Panama’s Red de Protección Social (CCT) Program The World Bank

6. Self targeting through consumption subsidies PROS Administratively simple Few errors of exclusion “Universal” benefit may be politically very popular CONS Hard to find really “inferior” goods May be hard to transfer large amounts Hard to reform Open to everyone but only the poor will be interested: Food subsidies of staples consumed by the poor • Technical Requirements chain • A service supplied by public • An “inferior” good with a suitable marketing and private sector where amenities can differ • Appropriate Circumstances • Low administrative capacity 6 The World Bank

7. Self-targetingthroughworkfare Labor intensive public works with wages set very low: works for targeting. Stigmatization can be high, exclusion errors can be high PROS • Administratively simple • Keeps work incentives • Eliminates concerns about ‘shirkers’ • Automatic exit criteria CONS • Organizing public works is not administratively simple • Not applicable for many programs or target groups • Foregone earnings reduce net benefit • Technical Requirements • Wage set below going wage for hard, physical labor • A works program that does high value-added projects • Appropriate Circumstances • Unemployment; Crisis and chronic poverty settings The World Bank

8. Categorical (demographic) targeting • Characteristics that are linked to poverty or vulnerability • Age: pre-school children and old-age • Marital status: single parent • Ethnicity: scheduled castes in India, native American • CONS • Weak correlation with poverty • PROS • Administratively simple • Low cost • Technical Requirements • Good civil registry • Appropriate Circumstances • When targeting specific vulnerabilities (malnutrition)

9. Community-based targeting • Uses a group of community members or leaders (whose functions are not related to the program) • They must identify those most in need according to program criteria (often OVC, elderly, hh w/o able-bodied adult) • Good results Community meeting SCT Zambia The World Bank

10. Community-based targeting PROS • Good information • Low(on the books) administrative cost • Local monitoring may reduce disincentives CONS • Unknown effects on roles of local actors • Costly for the community • May reinforce existing power structures or patterns of exclusion • May generate conflict and divisiveness • Local definitions may vary • Technical Requirements • Intensive outreach to decision-makers • Cohesive, well-defined communities • Appropriate Circumstances • Low administrative capacity • Strong community structures, political economy • Low benefit that must be finely targeted The World Bank

11. Proxy-means testing • Indicator. Consumption per capita • Threshold Source: Based on a representative household survey • Consumption is estimatedbased on observable household characteristics correlated with poverty, based on representative household survey • Technique: regression model on log consumption • Variables : location, housing quality, assets/durables, education, occupation and income, and a variety of others (disability, health, etc.). The regression model is used to estimate a household score • The score is compared to a threshold, determined to separate the predicted poorest x% of the population from the rest The World Bank

12. Means Testing (MT) • Indicator. Income per capita or per adult equivalent; or Asset ownership or value (wealth) • Threshold Source: Based on a representative household survey with information on income and assets • Method. Administrative income = formal income sources • Eligibility threshold = income cut-off that separate the target group (poor) from the rest • Administrative vs economic income: not all types of income sources may be included, but the large majority are • Issues: income under-reporting in the survey, informal income • Assets: used to filter-out asset-rich households The World Bank

13. Hybrid-Means Testing (HMT) • Indicator. Income, per capita or per adult equivalent; or Asset ownership or value (wealth) • Threshold Source Based on a representative household survey with information on income and assets • Method. Administrative income = formal income sources + estimated informal income • Eligibility threshold is the administrative income cut-off that separates the target group from the rest • Assets: used to filter-out asset-rich households The World Bank

14. No single method is best! Huge variation within method according to Implementation Implementation iskey! Coady, Grosh and Hoddinott, 2004 The World Bank

15. Combining methods may improve accuracy • Often a first step is geographical targeting • Then collect information at the household-level • Triangulate from several sources: • Respondent • Community • Administrative records at local and central level • Grievance and redress mechanisms • No matter which combination, implementation is key. • A Single Social Registry • A common targeting mechanism based on mixed method • A graduation strategy for social assistance beneficiaries The World Bank

16. Botswana Social protection is comprehensive, but efficiency could be improved • Analysis is based on 3 SP assessments in the last 4 years • High spending. Botswana dedicates 4.4 percent of its GDP to social protection. It has strong impact on poverty, but still poverty is high. • Poor targeting efficiency. The total amount spent on social assistance annually in Botswana would be enough to completely close the consumption gap and eradicate poverty. • Identified problems to solve: • (1) Lack of long term Social Protection planning; • (2) Lack of consolidated information system; • (3) Lack of proper targeting and common identification system; • (4) Lack of graduation strategy The World Bank

17. Botswana has embarked on effort to modernize its social protection system • Development of a National Social Protection Framework (NSPF) • Provides a Roadmap to a Coordinated Social Protection System • NSPF developed by inter-ministerial Steering Committee and is ready to go through approval process within government • Development a system that consolidates information about all social protection programs • Development of a Single Social Registry (SSR) • SSR currently being piloted in 4 districts (Gaborone, Kweneng, Katleng, South East) • Development of a common targeting mechanism • PMT tool for Botswana developed that should be combined with SSR • PMT tool has already been tested in two districts • Ongoing work on developing a graduation strategy The World Bank

18. Thank you! Intake Storing and archiving Database Training The database Source: BolsaFamilia municipal manager manual The World Bank

19. PMT or HMT? Pros &Cons PMT captures long-term, chronic poor; harder to capture welfare changes Census registration approaches with limited or absent program frontline units results in static caseloads for many years, followed by political economy issues at recertification Calibration of a new PMT model depends on the availability of a recent HH survey with a good consumption module HMT can capture welfare changes, both chronic and recent poor Depends on the availability/ quality of administrative data, frequency of updates. Eligibility criteria can be easily improved Open eligibility depends on availability of local offices close to beneficiaries HMT less reliable for: (i) groups relying on informal earnings The World Bank

20. Example: Means-Tested Programs in US 2. Extensive verification of information: Verification mainly covers two aspects: Identity and household composition Income, assets Two main instruments for verification: Documentation Automated computer matches, verification 3. Benefit calculations: Benefits calculated as the maximum benefit minus the income Taking into account household size Results in graduated benefits 1. Eligibility determined based on a number of tests: • Asset tests: • Financial assets compared to threshold; Vehicles (fair market value) • Gross income tests: • Gross earned and un-earned income • Compared to threshold • Takes into account household size • Net income tests: • Gross income minus set of standard deductions • Compared to threshold • Takes into account household size 20 The World Bank

21. More information • www.worldbank.org/safetynets • Enrollment in the Safety Net, How-to Note • Grosh, del Ninno, Tesliuc & Ouerghi, “From Protection to Promotion: The Design and Implementation of Effective Safety Nets”, Chapter 4 • Tesliuc, Pop, Grosh & Yemtsov, “Income Support for the Poorest: A review of experience in Eastern Europe and Central Asia” • Governance and service delivery, in SSN working papers series The World Bank