Aspects of design and implementation

Aspects of design and implementation

Targeting

The main objective of targeting is to deliver more resources to the poorest groups of the population. Targeting is a tool that has costs and benefits. Decisions about whether to target, how precise to be and what method to use will depend on the relative size of these costs and benefits, which will vary by setting.

Good evidence indicates that, for the most part, programs can focus resources on the poor to a moderate or high degree without incurring unacceptably high errors of exclusion (excluding poor groups) and cost.

A few methods of targeting and types of programs go hand-in-hand. However, several different methods can be used for a particular program resulting in better targeting:

• Means tests: A targeting method based on income that seeks to collect comprehensive information on household income and/or wealth and verifies the information collected against independent sources.

• Proxy means tests: A targeting method by which a score for applicant households is generated based on easy-to-observe household characteristics, such as the location and quality of the household's dwelling, ownership of durable goods, demographic structure, education, and so on.

• Community Based Targeting: A targeting method in which a group of community members or leaders (whose principal functions in the community are not related to the transfer program) decide who in the community should benefit.

• Geographic area: A targeting method in which location determines eligibility for benefits or allocates budget to concentrate resources on poorer areas.

• Demographic characteristics: A targeting method in which eligibility is based on age and gender.

• Self-selection: Programs designed so that take-up is expected to be much higher among the poor than the non-poor, or the level of benefits is expected to be higher among the poor e.g. low wage public works programs.

Targeting systems should allow new or newly poor households to access the program and move out the ones that are no longer eligible. The inputs to good targeting outcomes include adequate staffing; well-defined rules of the game; clearly assigned and sensible institutional roles; and adequate information systems, material inputs, monitoring, and evaluation.

Determining benefit levels

Benefits may be differentiated by household characteristics such as poverty level, size and composition, or specific needs or behaviors. Such customization will improve the poverty impact, but will complicate administration. Available budget allocations will greatly determine the efficacy of safety net programs. Programs with benefits that are too small will have little impact on beneficiaries and administrative costs will be high relative to benefits. Programs with high benefits will have a larger impact on recipient households, but will have a higher fiscal burden, require better design and targeting, and may induce disincentives.