Paper Targeting with Agents
Targeting economic assistance to the poor is a central problem in development. We study the problem of designing a proxy means test when the agent who implements it is potentially corruptible. Conditioning on more poverty indicators may strictly worsen targeting in this environment because of a novel tradeout between the statistical accuracy of the means test and its enforceability. We assess the necessary conditions for this tradeout in the context of Below Poverty Line card allocation in India. Using original data on rule-breaking and bribery we find that less eligible households are less likely to hold cards and pay larger bribes to get them, but that both effects are weak and consequently that rule violations are widespread. "Soft targeting" on unofficial measures of poverty is also weak at best, with the net result that the de facto allocation is much less progressive than the de jure one.
Published in: American Economic Journal: Economic Policy
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- Political Economy