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Is More for the Poor Less for the Poor? The Politics of Means-Tested Targeting
Abstract
Standard economic analysis suggests that when the budget for redistribution is fixed, income transfers should be targeted to (i.e. means-tested for) those most in need. However, both political scientists and economists long have recognized the possibility that targeting might undermine political support for redistribution. We formalize this recognition, developing a simple economy in which both non-targeted (universally received) and targeted transfers are available for use by the policymaker. When the budget can be taken as fixed, full use of the targeted transfer is optimal. However, when we allow the budget to be determined through majority voting (with the policymaker choosing the share of the budget to be spent on each type of transfer), the optimal degree of targeting is zero. More strikingly, we show that if the policymaker naively ignores political considerations, the resulting equilibrium actually minimizes not only social welfare, but also the welfare of poor and middle income agents. Thus political considerations cannot generally be regarded as simply another “small" extension of standard models. As a result, future models and actual policies advocating the use of targeting through means-testing should account explicitly for the role of political considerations.
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“political support for redistribution may be much higher if everyone gets a”
From Universal Basic Incomes versus Targeted Transfers: Anti-Poverty Programs in Developing Countries (2018) · cites this paper as Gelbach and Pritchett 2002
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- Stern, 1982, Optimum Taxation with Errors in Administration Journal of, Public Economics, 17
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Transfers in Cash and In-Kind: Theory Meets the Data
Currie, J., & Gahvari, F. (2008) · Journal of Economic Literature · doi:10.1257/jel.46.2.333 · Cited by 422
Universal Basic Incomes versus Targeted Transfers: Anti-Poverty Programs in Developing Countries
Hanna, R., & Olken, B. A. (2018) · Journal of Economic Perspectives · doi:10.1257/jep.32.4.201 · Cited by 299
The Impact of Unconditional Cash Transfers on Nutrition: The South African Child Support Grant
Agüero, J. M., Carter, M. R., & Woolard, I. (2006) · LA Referencia (Red Federada de Repositorios Institucionales de Publicaciones Científicas) · Cited by 229
Reassessing Conditional Cash Transfer Programs
Das, J. (2005) · The World Bank Research Observer · doi:10.1093/wbro/lki005 · Cited by 221
Poverty alleviation through geographic targeting: How much does disaggregation help?
Elbers, C., Fujii, T., Lanjouw, P., Özler, B., & Yin, W. (2006) · Journal of Development Economics · doi:10.1016/j.jdeveco.2006.02.001 · Cited by 209
Metadata
- Authors
- Gelbach, J. B., & Pritchett, L.
- Venue
- Topics in Economic Analysis & Policy
- Publisher
- Walter de Gruyter GmbH
- Published
- 2002-07-17
- Volume
- 2
- Issue
- 1
- ISSN
- 1538-0653 (ISSN-L)
- OpenAlex
- W2029699756
- Cited by
- 104
- References
- 0
- Citations by year
- 2026: 2 · 2025: 1 · 2024: 3 · 2023: 1 · 2022: 5 · 2021: 5 · 2020: 19 · 2019: 1 · 2018: 4 · 2017: 1 · 2016: 7 · 2015: 5 · 2014: 4 · 2013: 5 · 2012: 6
- FWCI
- 21.73
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Topics in Economic Analysis & Policy (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Political Science and International Relations › Social Policy and Reform Studies
- Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Fiscal Policies and Political Economy
- Keywords
- income redistribution, majority voting, budget allocation, social welfare, poverty, transfer payments, political economy of redistribution
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