Unit 4 Design and implementation of SP Flashcards
Targeting methods
- Means-testing; limitations: requires accurate data, administrative capacity, high cost, verification against independent sources – not feasible in many poor countries)
- Proxy means-test; based on characteristics (proxies for income: dwelling quality, assets, education, occupation…); Scoring characteristics to determine cut-off point, classification of “poor” / “non-poor” (e.g. Cambodia 4.1.1.1); can be used in poor countries
- Categorical targeting based on demographics (child, old age), disability, illness; advantages: relatively simple, less costly
- Geographic targeting –based on areas with certain characteristics, e.g. poverty mapping in Honduras for CCT Family allowance programme
- Community-based targeting – identification by locals (leaders, organizations, school officials… limitations: vested interests in choosing beneficiaries -> maintains social exclusion pattern
- Self-targeting: public works at low wages, unskilled tasks of inferior food aid goods: only the poorest, hungriest will participate.
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Vertical vs. horizontal efficiency of targeting
Economic efficiency of targeting: objective to maximize poverty-reduction potential with given budget; allows poorest to get more benefits than if all received equal share.
Vertical efficiency: Accuracy of programme in assisting only target group
Horizontal efficiency: ratio of target group benefits to total benefits needed by target group
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Issues related to increasing efficiency of targeting
Targeting efficiency depends on how poverty is defined (P0 vs. P1 vs. P2), requiring different strategies; type of strategy raises ethical and practical questions (e.g. target those just below poverty line, can lead to high poverty reduction if P0/poverty incidence is used)
Setting of poverty line: ambiguous, disagreements of minimum standards; those just above poverty line are excluded
Objectives of SP determines targeting: e.g. targeting of non-poor to fulfill security objectives
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Exclusion and inclusion errors
- Type I (exclusion) errors (false negatives, undercoverage) due to inaccurate poverty formulas, data entry errors, stigmatization, lack of funding causing enrolment caps
- Type II (inclusion) errors (false positives, overcoverage) due to inaccurate poverty formulas, fraud, corruption.
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Costs of targeting
- Administrative (resources, capacity, time to collect data, administer SP)
- Political (less political support and funding if target group is narrow -> smaller transfer size)
- Type II (inclusion) error: Fraud facilitated due to information asymmetry: lack of administrative capacity to collect and verify information
- Incentive costs: beneficiaries adjust labour supply to maintain eligibility (income below poverty line) (disincentive effect); e.g. Sri Lanka 1970s. (“costs that arise when eligibility criteria induce households to change their behaviour in an attempt to become beneficiaries”)
- Social: stigma on beneficiaries, discourages application due to effects on self-respect and respect by others. Early programmes (16th -20th cty) used stigma and coercive assistance to test the need (Townsend). Private cost: Nowadays stigma is used to improve vertical efficiency (e.g. bureaucratic systems, long and arduous process, tiny amounts of cash) -> only poorest try to obtain them; issue: reduces impact of transfers on poverty. Stigma from categorical targeting e.g. AIDS: double stigma, leads to exclusion errors
Destigmatising: sensitization campaigns, privacy protection (e.g. tax credit instead of “Family credit, income support”); pensions via national agency instead of local assistance office -> surge of applicants in UK 1940.
(4.1)
Benefit types;
what determines these?
Type: Food/Cash transfers, inputs, assets, subsidized public services, employment schemes, labour market programmes;
Type used depends on CONTEXT: politics, socioeconomic status, livelihoods, administrative capacity, budget constraints, policy-maker preference; and on OBJECTIVES: human capital accumulation (CCT); improved service (supply grants to service providers);
E.g. Cash vs. food debate: 1- how well are food markets functioning? (food transfers if thin); 2- trade-off transaction costs for public sector (food distribution more costly) vs. beneficiaries (cost of obtaining food with cash); 3- Impact on consumption? (risk of cash being used to finance vices; evidence that food transfers result in higher food consumption); 4- Beneficiary preference: varies, but women may prefer food due to better control.
Generosity (levels) of benefits determined by what factors?
1- cost effectiveness (IDOrgs: program theory: smallest necessary for intended impact, e.g. to cover poverty gap, increase school enrollment etc.);
2- Budget constraints and decisions on width or depth of coverage (trade-off: e.g. give peanuts to masses has no impact on extreme poverty);
3- Private costs for beneficiaries (e.g. conditionality-related) to be covered to avoid exclusion;
4- if goal is to reduce exclusion errors (due to private costs, stigma…) requires higher benefits; if goal is to reduce inclusion errors, then reduce benefits to discourage wealthier people to participate;
5- programme lifetime context, e.g. inflation, budget cuts, change of objectives
Benefit levels vary by type of programme; e.g. mid-income countries: Social pensions is highest % of pre-transfer consumption, followed by last resort programs, family allowances and CCT.
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“Graduation”
“Post-graduation”
Example
Graduation = successful programme exit; rationale: desirable, signifies underlying factors of poverty are addressed, not just mitigated; political & economic pressures to encourage graduation; reality: very few programmes achieve graduation; graduation may not be part of design, depending on objective (e.g. old age pensions vs. temporary employment scheme);
Post-graduation = follow-up and investment in beneficiaries after graduation to ensure they do not fall back into poverty; Costly, complex and rare, but impact on long-term poverty reduction, besides political gains (support).
Example: Ethiopia’s PSNP: 4 steps for promoting graduation and post-graduation support (4.1.3.1); FSP (Food security programme)employment programmes construct community assets throughout trajectory.
1. Ultra-poor: build confidence and credit-worthiness; extension, credit, intensive support; kick-start for productive undertakings – ASSET STABILISATION 2. Chronically food insecure: receive PSNP transfers, business development support (develop opportunities and business plan), FSP credit; encourage savings; - ASSET STABILISATION 3. PSNP graduates due to increased assets and incomes, but continued support from FSP (extension, credit) to keep building assets and achieve sustainable food security - ASSET ACCUMULATION 4. FSP graduates are food-secure, no targeted support needed, have access to mainstream credit and services, which have increased in scope due to increased demand - ASSET ACCUMULATION
(4.1)
How to transition from protection to interventions promoting independence?
Long-term view: CCT;
Short-term view: link transfers to productive programmes (employment, microcredit, literacy, capacity building, job training), e.g. Bangladesh IGVGDP: food distribution, capacity building, credit, savings plan; Labour market interventions: employment services, training, subsidies, public works, micro-enterprise development.
What determines selection of delivery mechanisms?
(instruments: Cash Bank Transfer Checks, vouchers Debit cards smart cards cell phones)
Selection of delivery mechanism: depends on context:
1- Infrastructure (financial infrastructure, coverage, banking efficiency; communications infrastructure, electricity, telephone lines; retail store capability to redeem vouchers). Emergency situation: infrastructure destroyed – use banking system, local shops or systems, direct disbursements. Political economy: willingness to invest in new technologies;
2- Number of beneficiaries (vast number – use banking system or cell phones (e.g. BFP), few – use local schools, NGOs, public agencies).
3- Geographical location of beneficiaries: access to banks, ATMs? Assessment of costs (admin., delivery)
(4.2)
Information systems:
3 criteria for effective tracking
Information systems: backbone of delivery mechanism, to track transactions, make programs accountable, detect and avoid errors; Should list all details of beneficiaries (13 pages of questions in BFP, very little in other programmes) and transactions;
Registry types: paper, electronic;
3 criteria for effective tracking:
1 – Single system and unique SID to avoid duplication of transfer,
2- Regular updates and recertification to avoid fraud and ghost payments,
3- Monitoring and Evaluation: evaluation of errors, ensure compliance with conditionalities, performance & impact assessment; System monitoring can help prevent error (unintentional violation of programme rule by official or customer), fraud (intentional abuse by claimants, concealing or distorting to be eligible), corruption (intentional abuse by staff, manipulation to gain political support or against payment). Informants (gvt, community members) ensure intended beneficiaries receive payment and no leakage; disseminate information concerning payments to beneficiaries and receive complaints about errors = INTERMEDIATION SERVICES
4.2
Elements of institutional analysis for SP implementation (what agencies? capacities?)
- Ideally, poverty reduction related agency should implement (knowledgable)
- Inter-agency coordination needed due to multidimensional nature of SP (health, education, agriculture…)
- Ministries of finance and planning to be involved for financing and long term sustainability
- Central government’s role to legitimize SP policies, gather support, coordinate agencies’ input (issue of SP programme drop when new gvt administrations take over
4.2
Decentralised vs. centralized implementation of SP: advantages and disadvantages in design, data collection, database management
decision guided by capacity, local government accountability to reduce risk of corruption, fraud, misallocation; Solution: allocate tasks according to comparative advantage (e.g. BFP, Cadastro Unico…)
- Local government advantages:
- understand dynamics due to proximity, e.g. who are most vulnerable;
- better able to select NGO/ private sector entities for outsourcing (know reputability, able to monitor);
- able to adjust policies to match local preferences (e.g. preferred seed variety, public works material);
- able to make linkages between SP and social services supply (e.g. CCT)
- more efficient, lower cost; database use for other purposes; empowerment of local authorities
Local government disadvantages:
- Limited capacity (staff, equipment – computers)
- Lack of local funding in poorest regions – greatest need
- Struggle to co-ordinate and standardize
- More risk of data manipulation - Central government advantages
- Coordination, quality assurance, uniformity (e.g. number of meals/day, calories/meal…)
- Capacity to rapidly fund and respond to shocks and downturns (co-ordination, central funding)
- Ability to maintain political and financial sustainability of programme (high-level commitment)
- Targeting design and evaluation requires expertise, software, and is costly
- More administrative efficiency, lower data manipulation tendency, SID facilities, less costly due to economies of scales
4.2
“Cost-effectiveness (CE)”
“Cost-efficiency”
“CBA”
“Value for money”
- Cost-effectiveness (CE): efficiency measure compares cost of 2+ actions to achieve a given outcome (e.g. change in poverty gap); Example: comparison of cost of actions (school feeding $1, survivor pensions $6, electricity subsidy $8, old age pension $9) in reducing poverty gap by $1 PPP in Guatemala school feeding most cost-effective.
Requires estimation of costs of programme, estimating benefits, to calculate ratio (total benefits/total costs); issue: data constraints, lack of information, thus rarely undertaken.
“estimates the costs in monetary terms of achieving a one unit change in a final outcome, which may not be expressed in monetary terms” - Cost-efficiency: compares the cost of 2+ actions to achieve a given output (e.g. delivery of given amount of money); more simple, more commonly used; Example: compares cost of different school feeding options of delivering 1000 calories (milk 1.5, porridge 0.5, cookie 1, lunch 0.2) or delivering 100g of protein.
- CBA: compares cost of 2+ actions to achieve 1+ outcomes, expressed in monetary terms; estimation of monetary benefits involves complex assumptions
“a comparison of all the costs and benefits of an intervention, in which costs and benefits are all assigned a monetary value” - Value for money: maximization of benefits in relation to costs; compares various outcomes in support of agreed goal, as CBA; limited VfM: calculates most cost-efficient way of delivering benefits.
4. 3
Design features influences value for money – how to improve cost-effectiveness?
- Keep administrative costs low (can be 1% up to 45%) but sufficient resources for critical functions
BUT design determines administrative costs: untargeted, large programme has lower admin cost than small, targeted; well-established less costly than start-up programme; Example: Cost-effectiveness of food subsidies in Mexico: low CE of food-based programme due to high administrative cost; Special establishments cause high administrative cost, low impact; easier-to stock, fortified food increases CE as nutritional impact is higher; e.g. milk lower CE than cereal. - Accuracy of targeting -> higher CE (inclusion/exclusion errors minimized)
- Larger transfers -> higher costs and higher benefits likely
- Direct and indirect benefits hard to estimate (for CEA and CBA), in particular indirect, e.g. spillover effect from new infrastructure built by public works programme
4. 3
