Communiqué: Helping the Programs that Help Indonesia’s Poor

December 10, 2011
Communiqué: Helping the Programs that Help Indonesia’s Poor
Community-based targeting meeting in Indonesia

By Jessica Engelman – Communiqué: Fall 2011, Volume 9

A new, award-winning student paper, “Including the Poor: Assessing the Effective use of PMT and Community Methods in Targeting of Social Programs,” examines methods to improve the efficacy of Indonesia’s social safety net programs. This Second Year Policy Analysis, authored by HKS students Maria Cardenas Mendoza and Espen Beer Prydz, was written in fulfillment of the requirements for the degree of Master in Public Administration in International Development at Harvard Kennedy School. Professor Lant Pritchett, who is a member of the Indonesia Program’s advisory group, was their seminar leader. Research for the paper was sponsored by the Center’s HKS Indonesia Program.

The paper concludes that, although Indonesia has a goal to reduce poverty to 8.5 percent by the end of 2014, an estimated 14.2 percent of the population currently live below the national poverty line and therefore it is necessary to significantly accelerate the pace of this reduction. The national government operates four primary social programs that provide services to the poor: Health Insurance for the Poor, Rice for the Poor, Unconditional Cash Transfer, and Conditional Cash Transfer. While these programs do serve many in need, their methods for identifying those who should benefit from the programs are faulty. Often, they include those who do not meet eligibility requirements and exclude those who do. The methods of identification are known as targeting. The authors posit that if the targeting methods for these programs can be significantly improved, then the overall performance of the programs can be affected dramatically, so that the benefits to target households are maximized and the cost of the programs is minimized.

The authors go on to describe four methods of targeting, all of which they say could benefit Indonesia’s poor. In particular, the report recommends a hybrid model of targeting that combines proxy means testing (PMT) and community-based targeting. PMT approximates the welfare level of potential recipients by “generating a score for potential beneficiaries based on easily observable characteristics” such as demographics, dwelling type, and assets (such as cars and motorbikes). And, community-based targeting “leverages community knowledge” through community meetings that can involve a combination of heads of households, village leaders, school officials, and health care workers. The report provides specific recommendations on which variations of each type of targeting would most help these social safety net programs help Indonesia’s poor.