Targeting the Poor: Evidence from a Field Experiment in Indonesia

Abstract

This paper reports an experiment in 640 Indonesian villages on three approaches to target the poor: proxy means tests (PMT), where assets are used to predict consumption; community targeting, where villagers rank everyone from richest to poorest; and a hybrid. Defining poverty based on PPP$2 per capita consumption, community targeting and the hybrid perform somewhat worse in identifying the poor than PMT, though not by enough to significantly affect poverty outcomes for a typical program. Elite capture does not explain these results. Instead, communities appear to apply a different concept of poverty. Consistent with this finding, community targeting results in higher satisfaction. (JEL C93, I32, I38, O12, O15, O18, R23)