Targeting Transfers to the Poor: the Case of Food Subsidies

Abstract

Provision of safety nets for the poor is a popular call in development policies especially in light of the government’s pursuit of structural and macroeconomic adjustments. A simple exercise in this article shows that even when the only information employed in identifying potential beneficiaries is the area of residence, an area-differentiated income transfer program amounting to P2 billion is capable of achieving the same poverty reduction as a universal program. Increases in food prices are also found to be inimical to poor households.