How Poverty Indicators Confound Poverty Reduction Evaluations: The Targeting Performance of Income Transfers in Europe
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This paper investigates whether two popular poverty indicators, namely income poverty and material deprivation, reach similar conclusions about the poverty reduction effects of income transfers. Such evaluations generally use income poverty. It is well-known, however, that poverty indicators regularly disagree about a person’s poverty status. What is less known is whether such disagreement also confounds estimates of a program’s poverty reduction effects. This paper compares the targeting performance of social assistance, housing and family transfers in countries with different welfare states namely Germany, France, Ireland, the Netherlands, Sweden and the United Kingdom. It finds that a transfer’s targeting performance does not differ much when defining the transfer’s target group either as the poorest income quintile or the poorest material deprivation quintile. Yet, when combining the information from both indicators, transfers appear much more effective in reaching those groups that both poverty indicators identify as part of the target group. Transfers also appear much more efficient in excluding non-target populations. For the groups on which the poverty indicators disagree, more analysis is needed. Triangulation between poverty indicators thus improves the validity of program evaluations as it enables a better separation between (potential) poverty measurement issues and the measurement of a program’s (potential) effects.
KeywordsPoverty Income poverty Material deprivation Program evaluation Transfers Targeting performance European Union
This EU-SILC approved research project was undertaken under affiliation with the Maastricht Graduate School of Governance at Maastricht University. It also contributes to the Social Policy and Innovation (ImPRovE) project, which benefited from financial support by the European Union’s Seventh Framework Programme (FP7/2012–2016) under grant agreement no 290613. I would like to thank four anonymous reviewers, Tim Goedemé, John Hills, Denis de Crombrugghe, the participants to the UNU-Merit-MGsoG lunch seminar (University of Maastricht 1 May 2012) and the CSB-lunch seminar (University of Antwerp 9 May 2012) for their valuable feedback and assistants Ainslie Cruickshank, Kirsten Davis and Khadidiatou Sy for their contributions.
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