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Operational Assessment of Monetary Poverty by Proxy Means Tests

The Example of Peru

Series:

Julia Johannsen

Despite the concern among donors, governments and practitioners about their success in reaching the poor, the lack of reliable low-cost tools makes it difficult to determine if development programs meet their poverty targeting objectives. This study develops an operational assessment tool of monetary poverty for Peru. In a comparative step-by-step procedure, it discusses aspects like the practicability of indicators, methods for indicator selection, comparisons of logistic, least-square, and quantile regression, the poverty classification of households, robustness of the tools over time and across sub-groups, and what Receiver Operating Characteristic (ROC) curves can contribute. In doing that, it also provides a general methodological pathway for the development of tools used for time and cost-saving targeting assessments.
Contents: Definitions and concepts of poverty – Purposes of monetary poverty assessment – Targeting methods – Prediction approaches in proxy means testing – Accuracy measures – ROC analysis – Out-of-sample validation – Practicability of indicator sets – Regression techniques – Poverty classification of households – Robustness tests.