Targeting Tools to Evaluate Social Programs

Abstract

AbstractThis chapter presents several new methods for evaluating the targeting efficiency and the social rate of return for social programs. The chapter applies these tools to assess the Chinese rural Dibao using CHIP 2013 data, the most extensive safety net program globally covering more than 40 million beneficiaries. It shows the poor targeting efficiency of the program, yielding a significantly negative social rate of return. The chapter has identified the causes of such a high degree of inefficiency in the program. Given the limitations of accurately obtaining people’s income or consumption, the chapter recommends a proxy means test as a targeting framework. The basic idea of a proxy means test is identifying beneficiaries by easily identifiable variables that predict a household in poverty. A nationally representative household survey makes it possible to design such a proxy means test. Such a system will be an objective way of selecting program beneficiaries. It should significantly improve targeting and reduce the cost of running the program. That should help China achieve its goal of alleviating extreme poverty by 2030.