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Optimal income support targeting

Stefan Wachter () and Sebastian Galiani

International Tax and Public Finance, 2006, vol. 13, issue 6, 661-684

Abstract: This paper considers the practical problem of distributing a fixed budget for poverty alleviation to a population whose poverty status is not directly observable. The solution we propose improves on the techniques that are commonly used in practice by taking both the concavity of the social welfare function and the entire conditional distribution of poverty status into account, and by endogenously determining the optimal transfer levels. We provide an algorithm to calculate the optimal transfers for any population of benefit applicants. Finally, we explain how our method is a generalization of statistical classification techniques and thus provide an intuitive discussion of the defects of currently operational methods. Copyright Springer Science + Business Media, LLC 2006

Keywords: Classification; Poverty; Program design; Targeting (search for similar items in EconPapers)
Date: 2006
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Related works:
Working Paper: Optimal Income Support Targeting (2005) Downloads
Working Paper: Optimal Income Support Targeting (2000) Downloads
Working Paper: Optimal Income Support Targeting (2000)
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