A hybrid approach to targeting social assistance

Abstract

Proxy means testing (PMT) and community-based targeting (CBT) are two of the leading methods for targeting social assistance in developing countries. In this paper, we present a hybrid targeting method that incorporates CBT's emphasis on local information and preferences with PMT's reliance on verifiable indicators. Specifically, we outline a Bayesian framework for targeting that resembles PMT in that beneficiary selection is based on a weighted sum of sociodemographic characteristics. We nevertheless propose calibrating the weights to preference rankings from community targeting exercises, implying that the weights used by our method reflect how potential beneficiaries themselves substitute sociodemographic features when making targeting decisions. We discuss several practical extensions to the model, including a generalization to multiple rankings per community, an adjustment for elite capture, a method for incorporating auxiliary information on potential beneficiaries, and a dynamic updating procedure. We further provide an empirical illustration using data from Burkina Faso and Indonesia.