Dynamic Consistency of Multidimensional and Income Targeting: An Application for Mexico Using Panel Data Information

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Abstract*This paper compares the dynamic consistency of targeting methodologies that use multidimensional welfare indicators with those based on means and proxy means tests using panel data from Mexico. To make these comparisons, an extension of the Alkire and Foster (2008) dual cutoff multidimensional poverty methodology is proposed. This extension provides a relative approach to multidimensional deprivation that ranks individuals according to an aggregate of their relative position in the distribution of a set of welfare attributes or outcomes. The extension gives particular importance to deprivations that affect smaller portions of the population, as these deprivations are especially critical in defining relative multidimensional welfare. The findings, disaggregated by geographical area (urban and rural), suggest that taking into account deprivation in multiple dimensions may lead to more dynamically consistent measures of well-being and thus more dynamically consistent targeting algorithms. JEL Classifications: I32, I38

Analyzing Multidimensional Poverty Estimates in Mexico From an Ethnic Perspective: A Policy Tool for Bridging the Indigenous Gap

“…The set of criteria that are contemplated to select who is to benefit from a given poverty alleviation program are commonly referred to as targeting mechanisms. Thus, “targeting” involves the design of schemes or measures that seek to ensure that specific population subgroups will benefit from anti‐poverty initiatives (Bouillon & Yáñez‐Pagans, ). Targeting is rarely uniform across population subgroups; policymakers are often constrained by budgetary restrictions and must rely on certain observable sociodemographic characteristics or on regional boundaries that serve as key indicators to allocate resources to have the largest impact on poverty reduction (Besley & Kanbur, ).…”

“…Aside from looking at family composition with regard to the number of children and their age, Prospera determines the eligibility of a home through the household's total current per capita income, a monetary single‐dimensional targeting method (Dávila Lárraga, ). However, targeting methods such as these have proven to lead to problems of leakages, under‐coverage, and inefficient spending by ignoring deprivations in other dimensions (Bouillon & Yáñez‐Pagans, ; Duclos, Tiberti, & Araar, ). Irregularities generally occur because, as pointed out earlier, monetary poverty indicators often provide insufficient policy guidance regarding deprivations in other dimensions of social rights.…”

“…Furthermore, there is a need to adopt a multidimensional targeting approach when looking to impact numerous deprivation outcome variables. Employing a single‐dimension targeting method to reduce multidimensional poverty rather than a multidimensional targeting approach is likely to result in the misallocation of resources and in less efficient poverty reduction efforts (Azevedo & Robles, ; Bouillon & Yáñez‐Pagans, ; Duclos et al, ). Studies have shown that, in addition to reducing poverty and improving the living conditions of the poor, targeting poverty multidimensionally increases efficient government spending and transparency.…”

Beyond money metrics

“…There is literature that links the Alkire-Foster method with poverty reduction interventions (Azevedo and Robles 2013;Trani, Biggeri, and Mauro 2013;Bouillon and Yáñez-Pagans 2011;Vaz, Malaeb, andQuinn 2019, Mauro, Biggeri, Grilli 2015). However, empirical evidence on the use of multidimensional poverty in the Alkire-Foster method in the impact evaluation literature remains scarce and provides a fertile ground for evidence generation on the usefulness of this tool to assess the impacts of social programmes and policies.…”