Successful Targeting? Reporting Efficiency and Costs in Targeted Poverty Alleviation Programmes

Economic, moral and political reasons may underlie the choice between targeting and universal models of social provision. In the debate about universal versus targeted solutions for combating poverty and social exclusion, many have called for targeted interventions, arguing that they are an effective way to reach the poor while maintaining budgetary restraint. In the context of minimizing government spending—a position that gained influence with the Washington consensus in the late 1980s and 1990s—targeted social programmes became widely accepted.

One of the main arguments behind targeting is to concentrate the limited resources of social schemes for the poorest and most vulnerable. Targeted schemes are presented as more effective in bringing resources to the poor, while maintaining low levels of social spending. Thus, it is argued, targeting delivers two advantages: it makes poverty alleviation measures more effective, and it maintains or decreases social spending. At first glance, such arguments seem logical, and in recent decades it has become widely accepted that targeted social programmes are a more cost-efficient way to reduce poverty than is universal provision.

Therefore, in the name of cost efficiency, there has been a continuous shift from universal provision to targeted schemes, not only in the industrialized countries but also in the developing world. But are targeted social programmes aimed at poverty alleviation always the best solution? By examining the arguments for targeting in light of its outcomes, and examining the efficiency of targeting with regard to economic and non-economic costs—specifically in the context of international commitments on poverty reduction—this paper presents four main problems associated with the reported “evidence” of targeting in poverty reduction programmes: (i) targeting does not necessarily target the poor; (ii) it is often not cost effective; (iii) it needs strong institutions, which is not always the case in the countries where it is implemented; and (iv) it is not always politically sustainable.

Because the World Bank has been one of the most prominent advocates of targeting and has published several studies on its effectiveness, and since the policies and methods recommended by the Bank have an important impact in shaping efforts to fight poverty, this paper pays special attention to the relevant World Bank publications.