DEVELOPMENT Poverty targeting: is it pro-poor or anti-poor? Stephen - - PowerPoint PPT Presentation

DEVELOPMENT

Poverty targeting: is it ‘pro-poor’ or ‘anti-poor’?

Stephen Kidd

10th January 2019

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Why undertake poverty targeting? Economic justice? Lower spending and taxes?

• r

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If there are limited resources, it is best to prioritise the ‘poor’

$100

= =

$1 per beneficiary $5 per beneficiary

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Adapted political settlement approach to understand the political economy of targeting

The balance or distribution of power between contending social groups and social classes, on which the state is based

Elites Powerless Powerful

Allocation of resources

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Alternative views on allocation of resources and the value of transfers

If the size of the pie is fixed, it makes sense to concentrate scarce resources on the poorest The more people covered by a programme, the more popular it will be, and the more funding it will attract, so the higher the transfer

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In a democratic context, who is more powerful?

The extreme poor? Those on middle incomes?

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Is the size of the pie fixed? Are there ‘limited resources’?

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20 60 20

The “extreme poor” Middle incomes The “rich”

Higher budgets and transfer values with higher coverage due to building alliances across wealth distribution

So, if a scheme includes

• nly the ‘poor,’ the

beneficiaries are weak politically If the beneficiaries include a broader group, they become more powerful, which leads to more investment and higher quality schemes

The higher the coverage of a scheme, the broader the alliance across the recipients.

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Poor relief in 18th and 19th Centuries

• Poor Relief in Europe began

in 17th Century

• The aim was to address

increasing poverty and social exclusion as a result

• f industrialisation and

urbanisation

• A key driver was fear of

social unrest, deriving from French Revolution

• It also aimed to stop

migration to the cities

Investment in Poor Relief in 1820

0.5 1 1.5 2 2.5 3 England Netherlands Belgium France Percentage of GDP

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The demise of Poor Relief

• High budgets for Poor Relief in

early 19th Century

• As democracy grew during the

19th Century, Poor Relief began to change

• As middle class men obtained the

vote, they were less willing to be taxed to pay for poor relief, as they did not benefit from it

• Development of concepts of

deserving and undeserving poor

• Support for undeserving poor

began to be made conditional – through the workhouse

0.5 1 1.5 2 2.5 3 England Netherlands Belgium France

Cost as a % of GDP

1820/30 1880

Fall in spending on Poor Relief in 19th Century

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Late 19th and early 20th Century:

Growth in programmes benefitting middle class

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 Australia Denmark Germany New Zealand Norway Sweden UK

Cost as % of GDP

1910 1930

Other services provided on a universal basis: e.g. primary education

State pension schemes grew in high income countries

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Post 2nd World War expansion in social security investment

Level of investment in social security in high–income countries

0% 5% 10% 15% 20% 25% Italy France Portugal Austria Belgium Finland Spain Slovenia Luxembourg Hungary Denmark Germany Czech Republic Japan Ireland Sweden Netherlands Slovak Republic Norway United Kingdom Latvia Switzerland Estonia New Zealand United States Australia Turkey Israel Canada Iceland Chile Korea Percentageof GDP Old Age Survivors Disability Children Unemployment Other

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Costs of social pensions: Inclusive vs targeted

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Georgia Mauritius Surinam Seychelles Trinidad Namibia Samoa South Africa Lesotho Kosovo Guyana Maldives Nepal Kiribati Cape Verde Swaziland Timor Leste Brunei Paraguay Hong Kong Thailand Korea Botswana Ecuador Kenya Vietnam Mexico Belize Panama Colombia Guatemala China Bangladesh Peru El Salvador Fiji India Malaysia Philippines Jamaica Indonesia

Percentage of GDP

Over 2/3 coverage of those of eligible age Under 2/3 coverage of those eligible age

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Higher coverage of pensions is associated with higher transfer values

Relationship between pension coverage and transfer value in countries scoring 5+

• n Democracy Index

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Level of investment in types of schemes

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% G e

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g i a M a u r i t i u s S u r i n a m S e y c h e l l e s T r i n i d a d N a m i b i a N e p a l S a m

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t h A f r i c a A r g e n t i n a B r a z i l M e x i c

• P

h i l i p p i n e s U r u g u a y J a m a i c a E c u a d

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Cost of scheme as percentage of GDP

Old Age Pension

Disability benefit Child benefit CCT

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0% 5% 10% 15% 20% 25% 30% 35% 40% L e s

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r a z i l K i r i b a t i N e p a l T r i n i d a d P a r a g u a y A r g e n t i n a G u y a n a S

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Transfer value as percentage of GDP per capita

Transfer values for different schemes

Social pension Disability benefit Child Benefit CCT

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Comparison of transfer values in Malawi and Lesotho

0%

• 24%

42% 30% 80% 74% 0%

• 21%
• 44%
• 17%
• 40%
• 60%
• 40%
• 20%

0% 20% 40% 60% 80% 100% 2 4 2 5 2 6 2 7 2 8 2 9 2 1 2 1 1 2 1 2 2 1 3 2 1 4 2 1 5 2 1 6 2 1 7 Percentage point change of real transfer value (baseline starting year of transfer) Year Lesotho OAP real value Lesotho OAP real value trend Malawi SCT (minimum benefit level) real value Malawi SCT real value trend

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Poverty targeting benefits the rich

Comparison of:

• Targeted programme of 0.5% of GDP

given to the poorest 20% of the population

• Universal scheme of 5% of GDP given to

everyone on an equal basis.

Assumptions:

• Same tax for everyone
• Perfect targeting

1000 2000 3000 4000 5000 6000 7000 8000

Poorest Quintile 2 Quintile 3 Quintile 4 Richest

Income

Change in income after tax and transfer

49.0

• 2.5
• 4.0
• 7.5
• 35.0

90 75 60 25

• 250
• 300
• 150

150 Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 Net income Targeted Universal

Wealth distribution

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Unfortunate Bad

Unconditional targeted transfer Conditional targeted transfer Vulnerable Lazy

“Poor”: two meanings

Deserving poor Undeserving poor

You poor thing! Poor quality

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Aim of social protection:

Idea that it is to support the poor and vulnerable belongs to a particular world view

Definition by Devereux and Sabates-Wheeler in Transformative Social Protection

• Social Protection is: ‘Initiatives that provide income or

consumption transfers to the poor, protect the vulnerable against livelihood risks and enhance the social status and rights of the marginalised; with the

• verall objective of reducing the economic and social

vulnerability of poor, vulnerable and marginalised groups’

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Social protection for “us” – as citizens –

• r for “the other”

We are all vulnerable

We may experience a disability We may lose

• ur job

We hope to have children We will all age and be less able to work We all can access social protection when affected by a contingency

Citizens The other

Vulnerable groups

The disabled The elderly Orphans

The unemployed

The poor

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Universal declaration of human rights

Article 22:“Everyone, as a member of society, has the right to social security” Article 25: “(1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. (2) Motherhood and childhood are entitled to special care and

• assistance. All children, whether born in or out of wedlock, shall enjoy the

same social protection.”

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Is accurate targeting possible in low and middle-income countries?

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Relationship between coverage and exclusion in targeting

Georgia Mauritius Bolivia Mongolia Child Money South Africa CSG Philippines: Pantawid Indonesia: BLT Brazil: Bolsa Familia Georgia: TSA Indonesia PMT Pilot Vietnam: Poor List Kenya HSNP Mexico: Oportunidades India: OAP Rwanda: DS Ethiopia PSNP Indonesia: PKH Rwanda: Ubudehe South Africa OAG Colombia FeA

10 20 30 40 50 60 70 80 90 100 20 40 60 80 100 Coverage (percentage) Exclusion error (percentage)

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Effectiveness of poverty targeting

Indonesia SP Cards (2017) Pakistan BISP (2015) Ethiopia PSNP (2015) Philippines Pantawid (2015)

78%

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Georgia’s universal pension

Correctly selected Exclusion error

Efficacy of universal selection

Bolivia’s universal pension

Exclusion error Correctly selected

Much more effective than poverty targeting, but higher cost

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Language influences how we view the world

The poor Non-poor

and

But a fixed group of ‘the poor’ is a fictional construct

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Most people are living on low incomes and would benefit from access to social protection

Purchasing power parity means that the amount would give you the same standard of living that you would receive on this amount in the USA In USA need $5 per day to purchase a minimum diet Poverty line in USA is $21 per day for a 4 person household

Poverty rates across 123 countries <$1.25 $1.25-$4.00 $4.00-$10.00 >$10.00

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Real levels of consumption in Africa

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We live in a world of uncertainty: Lifecycle risks

Early childhood Working age Old age

Disability & Chronic Illness

• Unsafe birth and no

access to ante-natal and post-natal care

• No immunization
• Stunting
• Reduced cognitive

development

• Child labour
• Unable to access or

stay in school

• Poor home

environment impacting on schooling

• Malnutrition
• Child abuse
• Loss of parents

School age

• Unemployment &

underemployment

• Costs of children
• Care of parents
• Debt
• Dowry
• No childcare
• Gender discrimination
• Domestic violence
• Increasing frailty
• Inability to work
• No care from family
• Discrimination in

labour force and access to credit Youth

• Inadequate skills
• Unemployment
• Inability to access

training

• Alienation

Traditional forms of “care and support” break down due to: Expansion of the market economy; New forms of labour; Urbanisation; Migration; High levels of poverty and insecurity

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Consumption and incomes are highly volatile

Consumption dynamics in Uganda (2 years) Consumption dynamics in Indonesia (1 year)

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Citizenship Charity

Help the poor Tackle inequality Right to social security Poor relief Larger state and schemes Small state and schemes Higher taxes Low taxes Inclusive Targeted Continuum

Paradigms of social protection

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Old Age Childhood

Child benefit Unemployment benefit Old Age Pension Maternity benefit Survivors’ benefit Disability benefit Poor Relief

Working Age

Citizenship vs poor relief approach

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How is ‘pro-poor’ understood by the World Bank?

Using this diagram, the World Bank argues that Kyrgyzstan’s Monthly Benefit for Poor Families (MBPF) scheme is ‘considerably more pro-poor’ than the categorical scheme

10 20 30 40 50 60 Lowest Quintile 2 Quintile 3 Quintile 4 Quintile 5 Percentage of households Categorical Scheme MBPF

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So, which of these pensions is pro-poor?

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Exclusion error Correctly selected

Georgia’s universal pension India’s old age pension Transfer value of 28% of GDP per capita Transfer value of 2% of GDP per capita

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Why the support for poor relief?

Ideology?

Is the neoliberal Washington Consensus alive and well?

Naivety?

Do SP ‘experts’ really believe that ‘targeting the poor’ is good for the poor?

• r

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Rolls Royce inclusive social protection Second-hand Lada poor relief

Pensions Child Benefits Disability Benefits Unemployment Benefits

Reaching the poorest Coverage Administration Transparency

CCT PMT Workfare Anti-Social Registry

CLEARANCE

Reaching the poorest Coverage Administration Transparency

CURRENT DEALS!!!

PROMO

If a country wants an effective social protection system, it has to be willing to invest

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0% 20% 40% 60% 80% 100% Lowest Highest Percentage of households covered

Percentiles of households (ranked based on consumption expenditure per adult equivalent)

Simulated comparison of poor relief and inclusive lifecycle system in Uganda

High inclusion

• f poorest
• 1. Inclusive lifecycle
• 100% over-65 years
• 80% of children
• 90% of people with

severe disabilities <65 Cost = 2% of GDP

• 2. Targeted social

assistance

• For poorest 10% of

households Cost = 0.4% of GDP

0% 20% 40% 60% 80% 100% Lowest Highest

Percentage of households covered Percentiles of households (ranked based on consumption expenditure per adult equivalent)

Simulated coverage of benefit targeting 10% of poorest households Simulated coverage of inclusive lifecycle system

High exclusion of poorest

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Higher levels of investment deliver higher impacts

Philippines:

• 11 percentage point increase in stunting among non-recipient children
• Increase in child labour among recipients

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Key quotes to remember

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World Bank (2015) Amartya Sen (1995) ‘The historical [...] evidence suggests that the forces pushing for better targeting are more regularly motivated by cutting entitlement bills and ensuring financial sustainability than by helping the poor’ ‘Benefits meant exclusively for the poor

• ften end up being poor benefits’

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Thank you