Operational models for improving the targeting efficiency of development policies : a systematic comparison of different estimation methods using ou...

There is a long-standing belief that accurate targeting of the poor can improve the effectiveness of development policy. While a number of factors, such as governance failure, inadequate targeting methods, political interference or lack of political will, might explain low targeting efficiency, this article focuses on improving indicator-based models that identify poor households more accurately. Using stepwise regressions along with out-of-sample validation tests, this article develops proxy means test models for rural and urban Malawi. The models developed have proved their validity and can therefore be used to target a wide range of development policies in the country. Likewise, the research here can be extended to other developing countries. [authors abstract]