Title: An Economic Interpretation of Targeting Systems for Social Programs: The Case of Colombia's SISBEN
Abstract: SISBEN is a proxy means test index widely used as a targeting system for social programs in Colombia. The SISBEN index is a function of a set of household variables related to the consumption of durable goods, human capital endowment and current income. SISBEN was created by the Colombian government with the purpose of simplifying, expediting and reducing the cost of targeting individual beneficiaries of social programs at the various government levels. Firstly, we find that due to its simplicity, low operation costs and net social benefits being brought to participating communities, SISBEN expanded quite successfully and rapidly across municipalities and departments. It is currently used in a wide range of subsidized social programs, particularly by those linked to health subsidies, established by Colombia’s Social Security Law. Secondly, we conclude that the SISBEN index has a solid foundation in welfare index theory, and can be seen as either a quantity metric utility index or a composite index of alternative forms of the household utility function. Thirdly, when valuable categorical data is available, traditional statistical methods of model fitting are not the most efficient and an alternative algorithm was used. We evaluate the adequacy of the estimation method “Optimal Scaling and Alternate Least Squares” (ALS-OS) applied to the household survey -CASEN (1993)- in order to construct the index. The method solves the statistical challenges as it imposes a metric to the categorical variables that are used to compose the index in order to maximize their contribution to a model of principal components. Empirical results show that this procedure not only selects the most relevant set of variables to discriminate households by welfare, but also provides to each different category a value and an order consistent with economic intuition on consumption and poverty. Finally, the power of SISBEN as a targeting device could be improved by excluding some variables that can be easily misrepresented in order to improve the likelihood of becoming a program beneficiary.
Publication Year: 1999
Publication Date: 1999-01-01
Language: en
Type: article
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Cited By Count: 14
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