Social Protection through the Looking Glass: Lewis Carroll’s parable for the unwary

The original version of this blog appeared on Development Pathways

What can a 19th Century work of literary nonsense teach us about global social protection debates? To mark April Fools’ Day, I would suggest that Lewis Carroll’s work The Walrus and the Carpenter can tell us more more about prevailing dogmas in the sector than you might imagine!

Lewis Carroll (aka Charles Lutwidge Dodgson) was a master of the art of literary nonsense. His major works include Alice in Wonderland and its sequel, Through the Looking Glass. One of the highlights of the latter work is a splendid poem, recounted to Alice by the tubby twins Tweedledum and Tweedledee, called The Walrus and the Carpenter. The poem tells the story of the two eponymous characters walking along a beach, finding a bed of oysters and persuading the younger oysters to follow them. It ends with the Walrus and the Carpenter eating all the oysters!

Critics have struggled to understand the deeper meaning of the poem ever since it was published in 1871. Many explanations have been offered. Some have suggested that the Carpenter is a caricature of Jesus Christ and the Walrus a caricature of Peter (or Buddha in another version), with the oysters as their disciples. Others have argued that the narrative is a critique of colonialisation, with the two protagonists representing the Empire and the oysters its colonies. Even J.B. Priestley has weighed into the debate, suggesting that the Walrus and the Carpenter were instead archetypes of two different types of British politician.

But I would like to suggest a new thesis: that it is an allegory of today’s social protection debates. On this basis, the Walrus and the Carpenter are the World Bank and the IMF respectively, the beach signifies the problem of global poverty, and the oysters represent national initiatives towards inclusive social protection. Let’s look at this in detail through some key verses. After three stanzas of scene-setting, we are introduced to the main characters:

“The Walrus and the Carpenter
Were walking close at hand;
They wept like anything to see
Such quantities of sand:
If this were only cleared away,’
They said, it would be grand!”

Here we see the two institutions surveying the extent of the problem of global poverty and wishing that it could be reduced. Presumably the Walrus has been used to denote the World Bank because of the consonance between their initial syllables; the Carpenter (i.e. a wood-worker) is clearly linked to the fact that the IMF was created at Bretton Woods (and the two organisations indeed continue to be known as the Bretton Woods Institutions).

Next, having expressed their desire to reduce poverty, we come to a crucial stanza where they opine how this might be achieved:

“If seven maids with seven mops
Swept it for half a year,
Do you suppose,’ the Walrus said,
That they could get it clear?’
I doubt it,’ said the Carpenter,
And shed a bitter tear.”

Immediately, the two institutions present a possible – but in reality, totally inappropriate – social protection solution to reducing the extent of global poverty. Interestingly, their default reaction, just as it is today, is towards a public works approach. And, as in many modern-day instances (think Ethiopia, Bangladesh, Zimbabwe), the proposed works are far from productive: using unsuitable tools (in this case mops) to sweep sand on a beach. Even more damaging (and again as is often the case today), they propose that it should be women who undertake this back-breaking work, thereby adding to their domestic burdens, and jeopardising the health and education of their children. The significance of the number of maids – seven – is presumably a reference to the seven key features of the blueprint World Bank approach to social protection, involving as it does a mix of: (i) poverty-targeting, (ii) an anti-social registry, (iii) proxy means testing, (iv) conditionality, (v) public works (vi) graduation, and (vii) an exit strategy.

“O Oysters, come and walk with us!’
The Walrus did beseech.
A pleasant walk, a pleasant talk,
Along the briny beach:
We cannot do with more than four,
To give a hand to each.”

In this next verse, the World Bank issues its enticing lure to the “oysters”, in other words to developing country governments wanting to invest in social protection: accept our package, and in exchange there will be cheap loans a-plenty and we will be there to lend a hand to each of you in designing your social protection system (in just the fashion we want it)!

“The eldest Oyster looked at him,
But never a word he said:
The eldest Oyster winked his eye,
And shook his heavy head —
Meaning to say he did not choose
To leave the oyster-bed.”

In this, my favourite stanza, the wise old oyster resists the siren call of the Bretton Woods package. He knows that, given time, the nascent national solution focused on inclusive lifecycle schemes is a better option: it will generate popular appeal, political energy and fiscal space, and it might – like an oyster – even create a domestic pearl that will endure for the long haul. Think of these prudent sages as countries such as Lesotho, Nepal, Mongolia.

“But four young Oysters hurried up,
All eager for the treat:
Their coats were brushed, their faces washed,
Their shoes were clean and neat —
And this was odd, because, you know,
They hadn’t any feet.

Four other Oysters followed them,
And yet another four;
And thick and fast they came at last,
And more, and more, and more —
All hopping through the frothy waves,
And scrambling to the shore.”

In contrast to the wise old sages, we see in these next two verses that many countries cannot resist the temptation of the Bretton Woods package: think Malawi, Liberia, Mali, Zimbabwe in Africa and Indonesia, Pakistan, Bangladesh and the Philippines in Asia (since they should come in groups of four). They are “all eager for the treat”, and have no idea what is in store for them…

These ingenues unwittingly walk a mile along the beach with the predators, and sit down on a “rock, conveniently low”.

“The time has come,’ the Walrus said,
To talk of many things:
Of loans — and shocks — and safety nets —
Of conditions — and of strings —
Why PMT is worth a shot —
And whether pigs have wings.”

Okay, I admit that I have made some minor adaptations to this particular verse, to contextualise it and bring it up to date. The original is concerned with typically nineteenth-century social issues, “of shoes – and ships – and sealing wax – of cabbages – and kings”. But, whilst the overall attitude of the Bretton Woods Institutions remains firmly embedded in the nineteenth-century worldview of poor relief and workfare, the terms of the debate have inevitably evolved over time. So I have tried to reflect some of the contemporary obsessions of the World Bank in today’s social protection debate, while remaining true to the spirit of the Carrollian original.

The protagonists duly have their “chat”; then, a few stanzas later, we move to the grisly denouement:

“I weep for you,’ the Walrus said:
I deeply sympathise.’
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes.

O Oysters,’ said the Carpenter,
You’ve had a pleasant run!
Shall we be trotting home again?’
But answer came there none —
And this was scarcely odd, because
They’d eaten every one.”

So, as the moral of this disturbing fable for today’s social protection debates, I borrow the warning from another presumed characterisation of the World Bank and the IMF in Through the Looking Glass: Beware the Jabberwock, my son, … and shun the frumious Bandersnatch! After their talk, the hypocritical Walrus sorts the oysters by size and devours them, all the while crying crocodile tears (to mix my animal metaphors!). At the end of the process, the only survivors are the World Bank and the IMF themselves, and no sustainable national social protection systems remain for those countries who chose to follow their advice: just like in real life!

Poverty-targeting: the social protection flaw?

The original version of this blog appeared as a Pathways Perspective on Development Pathways

As we start 2018, please may I have the temerity to suggest a common New Year’s resolution for all of us, as a social protection community: that we stop, definitively, the promotion of poverty-targeted approaches?

There are many, many disadvantages of poverty-targeting; and even its one supposed advantage – that it is cheap – is illusory, because low-cost social protection delivers few of the social, economic and political benefits that result from higher levels of investment. As with all things in life, you get what you pay for. Benjamin Franklin, a believer in egalitarian democracy, observed: “The bitterness of poor quality remains long after the sweetness of low price is forgotten”. And who really wants to be associated with something as tawdry as poverty-targeting?

Here are some of its many drawbacks:

·       It is impossible to do. First, of course, it is impossible to accurately identify the “poorest”, especially in contexts where the majority of the population live on low incomes. The charade that you can accurately measure and compare the poverty of different households is manifestly absurd, as has been frequently documented. We should all, at the very least, be open and honest that approaches to targeting on the basis of poverty (whether community-based or proxy means tested) are simply rationing mechanisms; and, in the case of the proxy means test, are as arbitrary as a lottery.

·       It adds cost and complexity. Even if a semblance of accuracy were possible at a given point in time, it is prohibitively expensive and complicated to maintain up-to-date information on comparative destitution, especially in countries where incomes are highly dynamic. In all low- and middle-income countries, a substantial proportion of the population moves in and out of poverty on a seasonal or annual basis. It is fanciful to think that a metric collected one year will have any validity in one year’s, three years’, or five years’ time.

·       It damages social cohesion. Because the outcomes are so random and unintuitive, poverty-targeting that chooses one household and excludes a nearly-identical neighbour will inevitably create jealousies and social tensions.

·       It is inequitable. In situations where many people are equally poor, to give an arbitrary selection of them a comparatively significant benefit will catapult the lucky few into a higher wealth category than the unlucky many. The “have-nots” will become the “haves” and will remain better off than the new “have-nots” until eventual re-targeting…when the iniquitous yo-yo will reverse.

·       It creates perverse incentives. As soon as people understand that they will only remain beneficiaries of a programme if they meet certain criteria of deprivation, they will be faced with the perverse choice between remaining poor and continuing to receive the benefit, or bettering themselves and losing it. Why pour a concrete floor, put a tin roof on your house, or save for your old age if, by doing so, you will be excluded from State benefits?

·       It rewards dishonesty. Again, with a growing understanding of the system, some people will be tempted to game it: they may borrow extra children from neighbours, feign disability, hide assets, or deny ownership of small livestock. The result is that dishonesty is rewarded and honesty penalised, which is damaging to the moral fabric of society.

·       It incites patronage. Giving anyone the discretion to influence the choice of beneficiaries for a programme puts that person in a position of power. This opens the door to abuse, patronage or exploitation. Even where such temptation is resisted, there may nonetheless be a perception of patronage, which again jeopardises the social compact.

·       It stigmatises. Poverty-targeting demeans programme beneficiaries, the polar opposite of the desired effect of social protection, which is to include and dignify. Posting the names of beneficiaries on walls, for example, or announcing them in public, has the effect of stigmatising vulnerable people, not empowering them.

But these defects, while egregious, are not the real issue. If you were an insensitive, extravagant, patronising bigot who didn’t care about dignity, ethics or equity, you could probably live with them. The real problem is the wider impact of such deficiencies on political support for social protection. National politicians shy away from poverty-targeted interventions. I challenge you to name one such programme that has led to an adequate – and sustainable – fiscal commitment to social protection, or has increased the real value of its transfers to beneficiaries over time.

Poverty-targeted programmes never become entitlements. As a result, they never generate popular demand (except among a voiceless minority) and, in consequence, they never gain political traction. Therefore, they never generate adequate domestic fiscal space for improved social protection.

Let’s look at a few examples: first, the much-vaunted – but poverty-targeted – Pantawid Pamilyang Pilipino Program (4Ps) in the Philippines. Figure 1 shows the evolution of the real value of the transfer since 2007: ever downwards. Worse still, as a result of this 32 per cent reduction over ten years, recent research by the World Bank has shown that some recipient children are now obliged to work to cover the costs of attending school in order to avoid being sanctioned or excluded from the programme.

Figure 1: Real value of the Philippines 4Ps transfer

Next, let’s look at a telling comparison between Malawi’s Social Cash Transfer (SCT) and Lesotho’s Old Age Pension (OAP). Both programmes started at around the same time and in response to the same problem: the ravages of HIV/AIDS. But Malawi’s was poverty-targeted, based on the (baseless) “10 per cent labour-constrained ultra-poor”, while Lesotho’s was near-universal, targeting all citizens once they reached the age of 70 years. Malawi’s has remained externally-driven, and is still – fifteen years on – more than 90 per cent funded by donors. Lesotho’s is (and has always been) fully domestically-funded and is very much part of the political landscape, with recent elections having been won and lost on competing pledges to increase the value of the transfer. As Figure 2 shows, the very different trends in the real value of the respective transfers is indicative of the difference between an inclusive “social protection floor” and a poverty-targeted “social protection flaw.”

Figure 2: Comparison between the real value of transfers in Lesotho’s OAP and Malawi’s SCT

Finally, look at the evolution in Zambia’s Social Cash Transfer scheme. Originally, like Malawi’s, this was tightly poverty-targeted at the “non-viable” poorest 10 per cent. For its first ten years it was almost exclusively donor-funded, and gained no attention from local politicians. It drifted unconvincingly, expanding from one district to five, then to eleven; from 1,000 households to 8,000, then to 24,000. But at this point (see Figure 3) it started experimenting with different categorical targeting approaches. Suddenly, politicians sat up and took notice…and domestic funding started to flow. In the five years since 2012, it has become essentially a near-universal old-age and disability pension…and it has expanded exponentially: to nearly 600,000 households in all 108 districts of the country. Donor funding has barely increased: the cost of the expansion has come from domestic resources.

Figure 3: Changes in coverage of Zambia’s Social Cash Transfer scheme

What we are striving for, as social protection practitioners, is programmes that are based on entitlement, that generate increased domestic funding, and that maintain (or even raise) the value of their benefits to the poor and vulnerable over time. We are not going to get this from poverty-targeting. So please can we make a common resolution to promote only inclusive approaches in 2018?

Will no-one rid me of this troublesome PMT?

The original version of this blog appeared on Development Pathways

Anyone who has worked in social protection knows that the thorniest issue of all is that of “targeting”. The recent polemics on these pages about the inadequacy of the Proxy Means Test (PMT) as a “targeting” mechanism have raised the more fundamental question of whether it is in fact the actual concept of “targeting” that is at the heart of the problem.

Amartya Sen began his famous and oft-cited paper on “The Political Economy of Targeting” (1995) like this:

The use of the term “targeting” in eradicating poverty is based on an analogy–a target is something fired at. It is not altogether clear whether it is an appropriate analogy. The problem is not so much that the word “target” has combative association. This it does of course have, and the relationship it implies certainly seems more adversarial than supportive.

Sen also worried that “targeting” treats the recipient as an object rather than as a human being (“The image is one of a passive receiver rather than of an active agent”). And Stephen Kidd, in his “Pathways Perspective” on “Rethinking ‘Targeting’ in International Development” (2013) argued that:

The concept of viewing recipients of public services as “targets” to be hit corresponds well with a neoliberal concept of social policy, in which people receive “assistance” as a form of government charity. It is much less appropriate within a paradigm in which public services are regarded as “entitlements” offered to “citizens”.

These are all fair points. But there is a further objection to the term. The concept of “targeting” carries with it an implicit assumption that accuracy is possible: the supposition is that we are able to hit a target. But such accuracy is, of course, impossible when we are trying to assess the comparative poverty of different households or individuals. There is no accurate way to capture the multiple facets of relative poverty: where a household lives, what it comprises, the age and capabilities of its members, what it owns, what characteristics and skills it possesses, what social bonds it has, and so on. To imagine otherwise is delusional. We need to be honest, and explain to policy-makers that PMT is not a “targeting” mechanism, it is one of several possible “rationing” mechanisms…and not necessarily the best one.

The concept of targeting should properly be reserved for the policy choice of which vulnerable group is to be the recipient of government support, for example the elderly, children, pregnant women, the working age poor. Here, at least some degree of accuracy of identification is possible. It is rather at the next stage that the problems arise: there is a subsequent choice about whether all of this group, or just some of them, should receive the benefit. Much the best solution of course is to provide the assistance universally, or at least only exclude the very wealthiest, as in South Africa’s self-declared affluence testing. But this decision is usually a function of the resources available: if they are inadequate, then some form of rationing will need to be applied to restrict them to just a subset of the group.

There exist a number of options. The major ones (in broadly decreasing order of acceptability, from best to worst) include:

• Eligibility rationing – where eligibility criteria are highly restricted, for example by setting the eligibility age of a social pension very high (e.g. over 70, as in Lesotho), or of a child grant very low (e.g. under 2 years). The advantage of this approach is that it limits the numbers, but is nonetheless universal, which makes it popular, and which allows the eligibility criteria to be gradually expanded over time (as has happened for example with the Child Support Grant in South Africa).
• Geographical rationing – where specific geographic areas are isolated for receipt of the benefit. Examples of this approach would include support to the riverine chars of Bangladesh, or to specific ethnic groups in tribal areas of Vietnam. The problem is that this is sometimes politically difficult, since it may create or exacerbate regional jealousies.
• Random rationing – where beneficiaries are selected by lottery. This is the practice in a number of instances, for example on the SWAPNO programme in Bangladesh. It may seem a bizarre way to allocate social “entitlements”; but it has the advantage that people understand its arbitrariness, and it is at least honest and transparent.
• Community rationing – where communities themselves are asked to ration the benefits of the programme. One advantage of this approach is that community members frequently opt for an inclusive approach, and simply distribute the total amount of the benefits equally among everyone in the community (as for example in Indonesia’s Raskin programme): universalism through the back door. On the other hand, there can also be significant challenges, where selection may reflect existing patterns of social exclusion within communities, or resources may be captured by the more powerful.
• Temporal rationing – where groups of beneficiaries are selected to receive benefits for a short period (often 1 to 2 years), and are then removed from the programme and replaced by a new set of temporary beneficiaries, as occurs for example in Uzbekistan. This is the approach of so-called “graduation” programmes. It may be fair in that it rotates the benefits, but impacts are seriously constrained as a result.
• PMT rationing – where a fallacious veneer of objectivity and transparency is applied to lottery rationing, permitting the selection process to be attributed to a computer rather than to pure chance. There is nothing inherently wrong with this: what is unethical – as we have seen from the evidence presented recently on these pages – is the charade that PMT results in accurate “targeting”.
• Auction rationing – where potential recipients bid against each other for inclusion on a programme, as for example in Bangladesh, where some beneficiaries of the old age allowance have had to pay up-front bribes of up to one year’s worth of benefits to be included. The most common manifestation of such auction rationing is public works programmes, where “beneficiaries” bid their opportunity costs for the privilege of expending valuable calories on hard labour in exchange for a meagre transfer.
• Patronage rationing – where community leaders or other worthies select beneficiaries based on their patronage relationships. Examples of this would include the constituency funds allocated in some Pacific Island states to Members of Parliament, for them to distribute as social assistance to selected constituents. The approach is not “fair”, but it is at least understandable, and transparent in its unfairness.

There is nothing very scientific about the list above, and the order of preference is strictly personal! But it demonstrates that there are other methods than the awful PMT to cut the cake. It may be that if the use of PMT for poverty-“targeting” is presented to policy-makers for what it really is – i.e. as one of many options for rationing limited social resources – then they will pay greater attention to alternative approaches…most of which are actually much better!

Poxy Means Testing: it’s Official!

The original version of this blog appeared on Development Pathways

“A prox on both your houses” [i]

The World Bank has recently – and some would say belatedly – undertaken a critical review of the Proxy Means Test (PMT)[ii], the approach to targeting that it has been advocating, uncritically, for the past decade.

The results are astonishing. Disguised beneath a splendidly econometric veneer, the raw findings that emerge demonstrate that the PMT is a wholly unsatisfactory targeting mechanism. Based on rigorous analysis of PMTs in nine sub-Saharan African countries (Burkina Faso, Ethiopia, Ghana, Malawi, Mali, Niger, Nigeria, Tanzania and Uganda), it finds the following: when using “Ordinary Least Squares results for Basic PMT” (the most common PMT approach), with a fixed poverty line of 20% of the population, “On average, the rate of inclusion errors implies that 48% of those identified as poor by the Basic PMT method are in fact non-poor”; and “The average exclusion error is sizeable, with 81% of those who are in the poorest 20% in terms of survey-based consumption being incorrectly identified as non-poor by the PMT method”.

Let’s just stop and think about this. What this means is that, if a country is encouraged to establish a poverty-targeted social assistance programme targeting the poorest 20% of its population, then its policy-makers will need to accept two facts: that almost half of the actual beneficiaries of the programme would be from outside the intended sub-group; and that fully four out of every five households intended to benefit would in reality be excluded from the programme. What kind of policy-maker would accept such lamentable targeting performance? In Mali, incidentally, not one single ultra-poor household was correctly identified by the PMT as being ultra-poor: an exclusion rate of 100%!

The paper goes on to suggest that certain refinements can improve the accuracy of econometric targeting. But the improvements are small, and the necessary refinements range from being unlikely to being wholly impractical in reality. At the unlikely end of the scale, one suggestion is to increase the coverage of such poverty-targeted programmes to 40% of the population. Yet there are practically no examples of this in Africa, and the reality is that the vast majority of PMT-based programmes target even fewer than the poorest 20%. At a more common level of 10% coverage, the targeting errors are likely to be significantly higher, especially since, as the paper states: “econometric targeting may have difficulty in identifying those who are very poor” and “PMT is missing many of the poorest households in all countries”. At the wholly impractical end of the scale, the proposal is to run an “Expanded PMT” with “far more data”. But here the paper itself accepts that: (a) “the improvement would have to be judged as modest”; and (b) “the field implementation of a PMT formula with many variables is expensive and difficult”.

Remember too that these underwhelming reported outcomes reflect only the inherent statistical inaccuracy of the PMT approach. As other papers have emphasised[iii], the overall performance of a PMT will inevitably be further compromised by a range of other factors. Many of these are touched on, but not explored, in the World Bank paper. Actually implementing the complex and unintuitive PMT approach is bound to introduce further errors (as the paper coyly admits “Field implementation may introduce idiosyncratic mistakes”, and “Most likely the methods will perform less well than our calculations suggest.”). And there are still further problems: (a) with a PMT’s perverse incentives (e.g. households not wanting to acquire assets or improve their dwelling for fear of being excluded); (b) with moral hazard (e.g. households being encouraged to lie about their situation in order to qualify); (c) with the actual costs involved in the targeting process; and (d) with the damage to social cohesion of an improperly understood and seemingly arbitrary selection procedure. As the paper acknowledges, “We present and compare the best-case results for the various methods reviewed, unaffected by potentially differential costs, ease of implementation, and susceptibility to manipulation and corruption”.

One final reason for the PMT’s inaccuracy – which the paper does explore – is that of its inability to respond to the dynamics of poverty. There is always a degree of churning in and out of poverty, and a PMT is very static: most PMTs are only re-run every five to ten years. The paper looks at the implications of this on targeting accuracy by using panel data and running the analysis with lags of one to two years. This shows that – even with such a small lag – inclusion error increases from 48% to 55%, and exclusion error from 81% to 90%. On this basis (which would become still worse over a longer time-lag), we would now need to be telling our putative policy-maker that his or her poverty-targeted social assistance will consequently include more unintended than intended beneficiaries; and that nine out of ten of the intended beneficiaries will be excluded from the programme. This is crazy: imagine trying to persuade a policy-maker to adopt a criminal justice system that resulted in more than 50% of all jail inmates being innocent, and nine out of ten criminals being found not guilty!

So what are the alternatives to PMTs? Well, the paper helpfully goes on to explore some options. It looks at various permutations of simpler, more transparent and more intuitive targeting approaches, premised on a basic income transfer either to all, or to selected categories of, the population (children, the elderly, widowed, disabled or orphaned). It assumes the same overall budget for all the options (though it doesn’t allow for the additional costs involved in running a PMT), and it looks at the comparative poverty impacts of each. The verdict: “even under seemingly ideal conditions, the ‘high-tech’ solutions to the targeting problem with imperfect information do not do much better than age-old methods using state-contingent transfers or even simpler basic income schemes. We find that an especially simple demographic ‘scorecard’ method can do almost as well as econometric targeting in terms of the impacts on poverty. Indeed, on allowing for likely lags in implementing PMT, the simpler categorical targeting methods perform better on average in bringing down the current poverty rate. This conclusion would undoubtedly be strengthened once the full costs of fine targeting are taken into account”.

The paper thus demonstrates conclusively that, in terms of poverty reduction in the real world, PMT performs worse than simpler categorical approaches or even basic income schemes…as well as being administratively costly, morally reprehensible and socially divisive.

Hurrah! But why has this taken so long? And what are the implications for those countries that the World Bank has already persuaded to sign up to such an execrable model?

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[i] To misquote Mercutio in “Romeo and Juliet” by William Shakespeare.

[ii] Brown, C, Ravallion, M and van de Walle, D (December 2016), “A Poor Means Test? Econometric Targeting in Africa”, World Bank Policy Research Working Paper 7915, Washington DC.

[iii] See for example, Kidd, S and Wylde, E (September 2011), “Targeting the Poorest: An assessment of the proxy means test methodology”, AusAID, Canberra; and Kidd, S, Gelders, B; Bailey-Athias, D (2017) Exclusion by design: An assessment of the effectiveness of the proxy means test poverty targeting mechanism, International Labour Office, Social Protection Department (SOCPRO), Geneva.

Poxy Means Testing

The original version of this blog appeared on Development Pathways

PMT is a curse! Sisters, you all know that: inescapable, debilitating, emotionally draining, a regular cause of extreme irritability!

But I refer here not to Pre-Menstrual Tension, but rather to a new form of PMT that is sweeping the globe: Proxy Means Testing.

This variant of PMT is a method of selecting poor people to become beneficiaries of social transfer programmes, currently being advocated strongly by, among others, my good friends at the World Bank. Proxy means tests generate a score for each applicant household, based on "fairly easy to observe characteristics of the household such as the location and quality of its dwelling, its ownership of durable goods, demographic structure of the household, and the education and, possibly, the occupations of adult members" (http://go.worldbank.org/SSMKS9WUT0).  The specific indicators used in calculating this score and their relative weights are derived from statistical analysis (usually regression or principal components analysis) of data from detailed household surveys.

PMT is touted as generating "impressive" results; it claims to be based on "statistically rigorous methods"; in Chile (where it all began), it exhibits an "excellent record" of targeting; in Fiji, it has been pushed as being "highly reliable"; in Jamaica, "leakage errors are less than 3 percent"; etc. As a result, the World Bank claims that PMT is "objective", that it has fewer disincentive effects than a true means test, and that it has been "proven to work particularly well in countries with high levels of informality and where personal and household income is difficult to verify with any degree of precision". Overall, the advocates of PMT paint a happy picture of a scientifically sound, technocratically robust and dispassionately objective solution to poverty targeting.

But a recent paper, Targeting the Poorest[i], suggests that the reality is very different, and cautions policymakers strongly against the dangers of being steamrollered into the adoption of PMT. It suggests that the PMT approach is demonstrably deficient in five main areas.

First, the datasets on which PMT is based are not fit for purpose.  The household surveys on which proxy means tests are modelled are designed to build an aggregate picture of poverty at national, regional and - less often - district levels; they are not appropriate for a detailed understanding of poverty in individual households. In addition to the intrinsic sampling errors, household surveys also suffer from substantial non-sampling errors, such as (i) lack of clarity on what constitutes a household, (ii) incomplete coverage, and (iii) the reticence of households to provide accurate information. These difficulties are further compounded by the fact that household surveys typically measure only consumption and expenditure, not income; that household surveys reflect only a single moment in time (often once every five or ten years), while poverty at household level is highly dynamic; and that data on asset-ownership (much used within PMT) is a reflection of past income, not of present income, which would tend to penalise, for example, older households, who have accumulated assets over a long period but whose current income is diminishing.

Second, PMT analysis can be unduly influenced by arbitrary statistical choices. The paper looks at three specific examples:

a)       How equivalence is calculated. Some analysts do not apply equivalence scales (ie they treat a child as having the same level of consumption as an adult), whereas others treat children up to 12 (or 14 or 16) as being equivalent to 0.5 (or 0.8) of an adult.

b)      How missing variables are interpreted. Inevitably there are missing data in household surveys; and analysts must decide whether these non-responses should be imputed or treated as absent. This decision impacts on the estimated value of the coefficients in the regression, and hence on the weights used in the PMT score.

c)       How sampling errors are treated. Household surveys only provide estimates based on a sample; their precision therefore falls within a range, at a given level of confidence. The paper tested two scenarios, one using the lower bound at the 95 percent confidence interval, and one using the upper bound.

The paper looks at the actual datasets for specific countries where PMT is used, and demonstrates that each one of these three sets of assumptions can arbitrarily change the eligibility status of some 10% of households. Cumulatively, this could mean that the eligibility of over 30% of households is determined not by its inherent poverty status, but by the statistical whim of an analyst.

Third, the regressions used in PMT do not provide sufficient clarity to distinguish between poor households. Clearly the choice of variables to be included in the PMT influences the outcome: by selecting only a subset of "fairly easy to observe" variables, the PMT model is inherently less able to reflect the same degree of variation as the more comprehensive list in the full consumption measure. Looking at examples in four countries where PMT is being used, the paper shows that PMT regressions typically only explain about 50% of the variation in consumption between households. What is worse is that they are particularly weak at the poorer end of the scale, thus making it especially difficult to distinguish between the poorest households. In other words, PMT "performs the weakest at the point where it would be expected to find the best correlation between assets and consumption". The paper's analysis of data from four countries (Bangladesh, Rwanda, Sri Lanka and Indonesia) shows that, depending on programme coverage, targeting error in PMT programmes is typically between 35% and 43% at a 30% coverage level, between 44% and 55% when 20% of the population is covered, and a staggering 57% to 71% at a (more common in reality) 10% coverage level.  Interestingly enough, a separate study in Pakistan, this one by the World Bank itself (Report No: 47288-PK, May 8, 2009), reported even higher exclusion errors: of 61% at 20% coverage and of 88% at 10% coverage. And remember that this is just the theoretical error of the PMT regressions: it will inevitably be further compounded by errors connected with the household data, with statistical analysis and with implementation.

Fourth, PMT faces significant challenges at implementation, and the paper cites a number of examples of this. There is the problem of finding the beneficiaries, using either a census or on-demand method, with examples of enumerators not wanting to enter urban slums because of security concerns; male enumerators being barred from  entering households where only females were present; evangelical families refusing to take part in the enumeration process; and nomadic groups, temporary migrants and remote communities being deliberately excluded. Another issue is the objectivity of enumerators, often with excessive demands placed on them, inadequate training and insufficient supervision: examples have been documented of corruption, inadequate time per interview, and deliberate changing of results where PMT was perceived to be wrong. Then there is the question of the verifiability of the indicators: assets can be hidden; ownership is hard to prove or disprove; education, occupation and even age can be falsified; indeed the fear that proxies may be easily manipulated has led advocates of PMT to suggest that proxies and weights should be kept secret - not exactly an advertisement for "transparency"! Other documented weaknesses include the fact that community verification is rarely effective; there is evidence in many countries of political interference; recertification is seldom sufficiently regular to capture the dynamics of poverty; and there is often no effective appeals mechanism - indeed there is an inherent irrationality in even introducing an appeals system against what is claimed to be a fair, objective and transparent system of selection. In this regard, it is notable that the World Bank’s social protection handbook (For Protection and Promotion: The Design and Implementation of Effective Safety Nets) clearly states: “Proxy means tests are most appropriately used where a country has reasonably high administrative capacity” ... which raises the question of why so many countries with relatively weak administrative systems (e.g. Pakistan, Kenya, Nepal, Fiji, Niger) are being encouraged to adopt the PMT methodology.

Finally, PMT does not avoid the social, moral, incentive or political costs of targeting. In terms of social costs, the paper cites qualitative research in Mexico, Nicaragua and Peru indicating that some community members ascribe the omission of poor households to luck or God’s will, describing the PMT methodology as similar to a lottery; the apparent unfairness of selection leads to feelings of despair, frustration, resentment, anger and envy, and there is evidence that this has resulted in a breakdown of community cohesion and even conflict. Morally, there is clearly the issue, as noted by Sen, that people may be rewarded for being deceitful and punished for being honest, which may in time corrode the fabric of society. Nor is it clear why incentive costs should be any less when using PMT: if potential beneficiaries are aware of the proxies, such as possession of animals or farm implements, they will be less likely to invest in them. And among the political costs of PMT is that poverty-targeted programmes, especially when perceived as arbitrary, tend to alienate the middle classes: evidence suggests that programmes using PMT never command as significant a share of GDP as, for example, universal programmes such as child grants and social pensions.

What do these deficiencies mean in practice? All in all, the paper finds that - despite all the grandiose claims of its proponents - PMT performs lamentably in targeting the poor.  It concludes that a striking finding of the analysis was the consistency of the magnitude of errors across countries, suggesting that such levels of error are to be expected using PMT methodologies as currently employed. It counsels policymakers to bear in mind "this combination of theoretical errors means a majority of eligible poor households may be permanently excluded from social grant benefits as a result of PMT scoring".

As I said, sisters, in another context, PMT appears to be "debilitating, emotionally draining, a regular cause of extreme irritability" ... but at least we can put a stop to this variant!

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[i] AusAID, Targeting the Poorest: An assessment of the proxy means test methodology, September 2011

Urgent: World Bank safety net needed

The original version of this blog appeared on Development Pathways

Beginning in the early 1980s, the World Bank (with the International Monetary Fund) foisted structural adjustment programmes on a variety of poor countries around the developing world. These programmes, based on the forced application of new ideologies of liberalisation and privatisation, led to massive unemployment, human misery and deprivation. Jobs were lost in government service (which had to be shrunk drastically), in state marketing boards (as trade was thrown open to the private sector) and in public services (where utilisation fell as a result of the introduction of prohibitive access fees).

In partial (and inadequate) response to this, the World Bank adopted the idea of “safety nets” to help the main losers and minimise social unrest. In 1987, to cushion the adverse effects of structural adjustment programmes on the poor, the Bank helped Bolivia to establish a first Emergency Social Fund (ESF) aimed at providing emergency relief through creating temporary employment and improving income. The Bank’s commitment to “safety nets for the poor” was set out in the World Development Report 1990: Poverty. And, after Bolivia’s ESF, the wave of social funds and public works spread to more than 60 countries, throughout Latin America, Africa, Asia and – from the 1990s – eastern Europe. By 2014, a World Bank review[i] counted 94 countries with public works programmes, often cleverly rebranded as “productive safety nets” rather than workfare.

Starting in 2001 and learning from existing programmes in Brazil and Mexico, the Bank began to support Conditional Cash Transfer (CCT) programmes…in Colombia, Jamaica, Turkey, the Philippines, Indonesia, Kenya and elsewhere; the same recent review counted 64 countries with CCTs in 2014. The Bank still confusingly termed these programmes “safety nets”: which was odd, because one of the key arguments it used to get around its own restrictive bylaws on providing loans for direct cash transfers was that CCTs had human development as their main objective. For the Bank, therefore, safety nets gradually became synonymous with social assistance and social transfers, but with distinctively neo-liberal characteristics: small-scale, poverty-targeted (usually using proxy means testing), involving a labour requirement or compliance with human capital conditions, and often with an objective of “graduation”. And so they have remained, rolled out as a kind of blueprint in tens of countries around the world, with technical support from a veritable army of World Bank technical experts with specific skill-sets.

Until now! On 30 June 2015 – seemingly out of the blue – the President of the World Bank, Jim Yong Kim, threw his organisation’s full weight behind universal social protection. In a joint statement with the ILO, he recognised the opportunity “to make universal social protection a reality, for everyone, everywhere”; and he even explicitly recognised that countries might prefer not to adopt the Bank’s established safety net blueprint: “There are many paths towards universal social protection. It belongs to each country to choose its own, and to opt for the means and methods that best suit its circumstances”.

The concept note supporting this bold statement contains no allusion whatsoever to poverty-targeting or proxy means testing; it doesn’t include the word “conditions” (still less the non-word “conditionalities”); it makes only one brief passing reference to public works programmes; the concept of “graduation” is totally absent; and the term “safety net” doesn’t even get a mention. Rather, the concept note recognises that social protection “is a human right that everyone, as a member of society, should enjoy, including children, mothers, persons with disabilities, workers, older persons, migrants, indigenous peoples and minorities”. The Bank’s stated objective is now “to increase the number of countries that can provide universal social protection, supporting countries to design and implement universal and sustainable social protection systems”.

This is of course excellent news for the wider cause of global social protection. But there must be concerns that – like structural adjustment three decades back – the imposition of this new ideology may entail serious human costs. In particular, it risks creating swathes of unemployment among the massed ranks of the World Bank’s safety net experts. What is to become of all those worthy Bankers whose skills, acquired and nurtured over the intervening years, have suddenly become redundant? This would include, for example: the multiple trainers on its annual social safety nets training course; the proponents of public works programmes with their endless discussions over setting the optimal wage rate and calculating the net present value of assets generated; the arcane wizards of proxy means testing, debating the sensitivities of equivalence scales and the merits of ordinary least squares over quintile regression (while still delivering a highly inaccurate targeting methodology); the fanatics of graduation, endlessly reworking their formulas and indicators to exit people from safety nets as fast as possible; and the advocates of conditionality, devising ever more complex experiments to try to demonstrate that attaching conditions to social transfers actually makes any difference (despite the accumulating evidence that it does not). All these, incompatible as they are with rights-based universal social protection, are now apparently relics of the past, consigned – like the poor laws and workhouses before them  – to the dustbin of social policy history.

So how can we help these unfortunate souls now they are no longer useful to the World Bank? With their redundant qualifications and outmoded skills, we must nonetheless hope against hope that they will be able access an adequate safety net. In particular, we must trust:

• That having spent so many years devising and imposing non-human rights based safety nets, they themselves are not now denied their basic human right to social security.
• That the poverty-targeting approaches they have designed are sufficiently responsive to detect their plight rapidly (though unfortunately the next retargeting exercise is not scheduled for another three years and may well be delayed further).
• That the proxy means testing formulas they have devised are sensitive enough to identify them as being particularly worthy of support, ideally without too heavy a weighting against asset-ownership, previous income or educational level of household head.
• That their once leafy, yet now deprived, townships around DC will be geographically targeted for inclusion in a putative Safety Net for Indigent Professionals (SNIP) emergency response programme.
• That they are physically robust enough to toil for hours each day in the torrid heat of the Washington sun, in order to receive a derisory wage set tantalisingly below the statutory minimum.
• That they are located close enough to basic health facilities and public educational establishments that they and their children will be able to comply with any necessary “human capital co-responsibilities”.
• That the graduation criteria for programme support are not set so low that they will have to exit the safety net before they have had time to equip themselves with the new skills needed to re-engage with the labour market.

This promises to be a true test of safety nets!

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[i] Oddly enough, The State of Social Safety Nets 2015 was published just a week after the President’s statement advocating universal social protection. Let us hope (a) that this was an unfortunate coincidence and not an early indication of dissent and recalcitrance among displaced World Bank staffers, and (b) that the hoped-for safety net is indeed up to the task of defusing any resultant internal unrest. We look forward already to the next edition of this flagship report, entitled, no doubt, The State of Universal Social Protection 2016!

The Ages of Man – Shakespeare and social protection through the life-course

The original version of this blog appeared as a Pathways Perspective on Development Pathways

Introduction

Readers of earlier Perspectives and blogs on this site (see, for example, The Seven Deadly Myths of Social Protection) will recognise that there are two opposing ideologies of social protection. The first is manifested in the neo-liberal “poor relief” approach:  poverty-targeted, conditional, and focused on ameliorating the symptoms of current deprivation. The second is represented by a more inclusive, universal approach that aims to tackle the fundamental causes of poverty, often based on addressing vulnerabilities through the life-course. Let us turn to William Shakespeare, the greatest writer in the English language, to help us understand the overwhelming advantages of the second approach.

In Act 2, Scene 7 of As You Like It, written in 1599 or 1600 at the apogee of his illustrious career, the “Bard of Avon” wrote a famous monologue setting out the seven ages of man. The “ages” are not always depicted in the most flattering light, as befits the nature of the melancholy Jaques who articulates them. But they nonetheless provide a useful framework for thinking about a life-course approach to social protection. So, in this paper, I have taken the Bard’s seven ages to examine vulnerabilities at each stage of the life-course and propose potential social protection interventions that may be used to mitigate them.

Three important messages about social protection already emerge from the opening lines of the soliloquy:

                                    All the world's a stage,
And all the men and women merely players:
They have their exits and their entrances;
And one man in his time plays many parts,
His acts being seven ages.

The first is the emphasis on “all the world” and the implication that social protection should be available to all: in other words, that it should be inclusive and provided universally. The second is the explicit focus on “all men and women”, underlining that social protection needs to be gendered to reflect the fact that men and women may experience different vulnerabilities requiring nuanced responses. And the third is that one man – and “man” is used throughout to denote “woman” as well – “plays many parts” in the course of his or her life and is therefore exposed to changing vulnerabilities and needs over time.

Infancy

                                      At first, the infant,
Mewling and puking in the nurse's arms.

Infancy is perhaps the stage of a person’s life when he or she is most in need of protection. Indeed, such protection should ideally start at conception, and should cover – at an absolute minimum – the “first 1000 days”. The vulnerabilities of the “mewling infant” would include: malnutrition, resulting in permanent physical stunting and reduced cognitive development; missed immunisation and growth monitoring; limited access to ante- and post-natal care; and the possible loss of parental care from bereavement or migration. Social protection responses to counter these vulnerabilities would include: maternity/paternity benefits and leave entitlements through social insurance; and a universal maternity grant, family allowance or child benefit funded by government – since this is such an important investment for the future – possibly in a way that incentivises attendance at birth counselling, facility-supervised birth, birth registration, regular growth monitoring, and vaccinations. They might also encompass access to childcare services for working mothers of young children – like the “nurse” in whose arms this particular Shakespearean infant is mewling – as argued in another of our Blogs.

School age

And then the whining school-boy, with his satchel
And shining morning face, creeping like snail
Unwillingly to school.

Key vulnerabilities of the “whining student” would include child labour, and the inability (for whatever reason) to access school or to have a satisfactory environment in which to study; malnutrition, which, whilst not having the same irreversible consequences as during infancy, can still impede growth, learning and mental development; and, again, the loss of parental care from bereavement or migration. Social assistance is important here, particularly in ensuring access to school (for girls in particular, but also for boys) and in optimising the quality of the learning environment. Instruments would include child grants – such as South Africa’s Child Support Grant – educational stipends, bursaries and school meals. Furthermore, pensions for the elderly would help those children whose parents have migrated or died, an example of how interventions at one stage of the life-course can be extremely beneficial at other stages.

Youth

And then the lover,
Sighing like furnace, with a woeful ballad
Made to his mistress' eyebrow.

The “woeful ballad” of challenges faced by young adolescents would include: a lack of adequate skills to enter the labour market and consequent unemployment or underemployment; the inability to access appropriate training; resultant feelings of inadequacy, alienation and frustration; the risk of being pressured into early marriage; and – for young girls – the dangers of early pregnancy and motherhood. Social assistance responses should include the availability of secondary and tertiary education stipends and support to access free technical vocational and educational training. Helping to keep children in education is one of the most effective methods of reducing teenage pregnancy and early marriage, but social legislation – together with investment in its enforcement – also has a role to play. Here too, it is worth noting that many of the problems of young people listed above could have been avoided through better social protection during infancy and school age.

Working age

Then a soldier,
Full of strange oaths and bearded like the pard,
Jealous in honour, sudden and quick in quarrel,
Seeking the bubble reputation
Even in the cannon's mouth.

For those in physically demanding employment, there are significant risks of work injury, sickness and invalidity. As Shakespeare cautions, however well things are going and however fast one’s “reputation” is rising, the “bubble” can always burst suddenly: the result is reduced income and sometimes dramatically diminished well-being for the household. Where such employment is in the formal sector, like our “bearded soldier” here, such risks should be covered by contributory social insurance schemes: unemployment benefit, work accident compensation, sickness benefit, and invalidity insurance. For those in the informal sector, there needs to be access to Government-financed social assistance in the form of grants for disability and chronic illness. Other gendered vulnerabilities at this stage would include domestic violence, demand for dowry payments, discrimination against women in the labour market, unavailability of childcare services, and the need to look after ageing parents. Many of these can be addressed through social assistance – such as child grants, family allowances and old age pensions – which allow others to care for children and parents so that mothers can return to employment (a further example of how interventions can have benefits across the life-course). Others – such as domestic violence, dowry and sexual discrimination – are best addressed by other policies (or a mix of policies).

Maturity

And then the justice,
In fair round belly with good capon lined,
With eyes severe and beard of formal cut,
Full of wise saws and modern instances;
And so he plays his part.

Maturity is depicted as a time of moderate comfort and in a relatively positive light (perhaps because Shakespeare was at this established stage when he wrote the play!). But during this phase of the life-course there are still risks, not only the continuing ones of accident, sickness, and invalidity but also, increasingly, of unemployment (or at least underemployment), and the inability to find new work. Key social protection responses will include the range of social insurance benefits mentioned above. But social assistance is also required for those outside the formal sector: this might take the form of income tax credits, direct income transfers, an employment guarantee scheme, public works opportunities, or retraining for new employment opportunities.

Old age

The sixth age shifts
Into the lean and slipper'd pantaloon,
With spectacles on nose and pouch on side,
His youthful hose, well saved, a world too wide
For his shrunk shank; and his big manly voice,
Turning again toward childish treble, pipes
And whistles in his sound.

The vulnerabilities faced in old age, as expressed so eloquently by Shakespeare, include increasing frailty (“his big manly voice, turning again toward childish treble”) and a decreasing ability to work (“his shrunk shank”), although it is worth remembering that many older people nonetheless continue to work: for example, some 50% of farmers globally are more than 60 years old. There is also the possible lack of care from family, and discrimination in areas such as accessing the labour force or obtaining credit. At this “sixth age” of the life-course, support to the “slipper’d pantaloon” should consist of an old age pension. Ideally this would be one with three tiers: a foundation tier of a universal non-contributory citizens’ pension; a mandated compulsory contributory old-age benefit funded through social insurance; and voluntary pensions provided by the private sector which would be funded from additional savings made at the stage of having a “fair round belly with good capon lined”. Having access to income allows the elderly to remain active contributors to social networks, rather than becoming dependent on others or – worse still – being excluded from family support as a result of being viewed as a burden.

Death

Last scene of all,
That ends this strange eventful history,
Is second childishness and mere oblivion,
Sans teeth, sans eyes, sans taste, sans everything.

The final stage of each individual’s “eventful history” is indeed “mere oblivion”. But even here social protection has a valuable role to play, in ensuring that the surviving members of the household are not left bereft, or “sans everything”. From a social insurance perspective, this would include death benefits, funeral insurance and survivors’ allowances. Informal systems include savings schemes and burial societies. And government assistance might include a social pension for widows who have not yet attained the qualifying age for an old age pension.

Conclusion

Shakespeare knew a thing or two about life and hardship, and about “shuffling off this mortal coil”. The unmitigated cynicism of Jaques in As You Like It is a constant reminder that grief, sorrow, suffering and death provide the inevitable counterpoint to all human joy and success. Through this melancholy mouthpiece, Shakespeare tells us more about the pre-eminence of the life-course approach to social protection than the majority of learned papers and policy documents on the subject. With that in mind, and in deference to those that persist with the alternate neo-liberal approach, let’s leave the last wise word to another splendid character in the same play, the court jester or “fool”, Touchstone:

The fool doth think he is wise, but the wise man knows himself to be a fool.