Poverty Targeting with Imperfect Information (opens in new tab)

A key challenge for targeted antipoverty programs in developing countries is that policymakers must rely on estimated rather than observed income, which leads to substantial targeting errors. The policy problem is not only to predict income, but to decide how noisy income estimates should be translated into feasible transfers. I formulate this as a statistical decision problem in which a policymaker chooses transfers to minimize a poverty-ta...