Files
Abstract
One of the common criticisms of poverty alleviation programs is that the high
share of administrative (nontransfer) costs substantially reduces the programs’ impact on
poverty. But very little empirical evidence exists on program costs. For example, a
recent extensive international review of targeted poverty alleviation programs in
developing countries could find data on costs for only 32 out of the 111 program
reviewed. Even then, the numbers available were not always comparable. In this paper,
we present a detailed analysis of the cost structure of a program recently introduced in
Mexico, called PROGRESA. Our analysis shows how cost data can be used as the basis
for an evaluation of the cost efficiency of anti-poverty programs. It cautions, however,
that one must be very careful when interpreting cost numbers or undertaking comparisons
across programs in order to avoid misleading conclusions. Any credible analysis of a
program’s cost efficiency must involve a detailed analysis of cost structure and not
simply provide aggregate cost information. We also highlight the importance of not
neglecting private costs incurred by households in taking up transfers.