Poverty targeting in public programs: A comparison of alternative nonparametric methods

Isha Dewan () and Rohini Somanathan
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Isha Dewan: Indian Statistical Institute, New Delhi

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: Very poor households may be excluded from public programs intended for their benefit for a variety of reasons as lack information, a permanent residence or membershiip in social networks. We are interested in methods of testing for such exclusion based on independently drawn samples of program participants and non-participants. We discuss three alternative nonparametric procedures; sign tests, tests for stochastic dominance and a test for distribution crossing. In the cases where there is a poverty threshold below which program participation is difficult, our simulation results suggests that the last of these test procedures is the most powrful. we apply this test to data from a microfinance program in India and find evidence that the poorest households in the area were largely outside the program.

Pages: 28 pages
Date: 2004-06
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Citations: View citations in EconPapers (2)

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