Refining Targeting against Poverty Evidence from Tunisia

We introduce a new methodology to target direct transfers against poverty. Our method is based on estimation methods that "focus on the poor". Using data from Tunisia, we estimate 'focused' transfer schemes that highly improve anti-poverty targeting performances. Post-transfer poverty can be substantially reduced with the new estimation method. For example, a one-third reduction in poverty severity from proxy-means test transfer schemes based on OLS method to focused transfer schemes requires only a few hours of computer work based on methods available on popular statistical packages. Finally, the obtained levels of undercoverage of the poor are particularly low. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2010.