ABSTRACT

Targeting involves delivering benefits to the intended beneficiaries and excluding unwanted recipients. Targeting of social benefits based on some notion of need or entitlement is a concept that dates back to ancient Rome and beyond. One central issue is the cost in identifying beneficiaries in order to prevent leakage: this cost is hypothesized to increase exponentially with the fineness of targeting as policy moves from a universal benefit to perfect targeting. Information constraints in developing countries often prevent the income-based targeting common in developed countries, and rough correlates with income such as geographic location, social indicators (e.g. malnutrition, gender of the household head), or some combination are often used. Another option is self-targeting: to offer a good the wealthy would decline, such as a below market wage, but this may have high attendant stigma costs. In addition to information constraints, social policy needs to take account of the incentive effects (see incentive structures) of a given targeting mechanism. For example, targeting a particular region may cause a shift in migration patterns.