Citation

Sumarto S, Suryahadi A, Pritchett L. World Dev. 2003; 31(7): 1257-1277.

Copyright

(Copyright © 2003, Elsevier Publishing)

DOI

10.1016/S0305-750X(03)00066-4

PMID

unavailable

Abstract

We extend the standard concept of static benefit incidence to dynamic benefit incidence--the relationship between program benefits and changes in household expenditures. Using panel data we compare the static and dynamic benefit incidence of two programs: sales of subsidized rice targeted on administrative criteria and a set of public employment schemes based on self-selection targeting. Program design appears to have made a substantial difference in both static and dynamic benefit incidence. The employment creation schemes were much more responsive to expenditure shocks than were sales of subsidized rice. For instance, a household from the middle quintile of expenditures in the pre-crisis survey period (May 1997) who suffered the worst quintile shock was four times more likely to have participated in the employment creation program than a similar household with a positive shock but only one and a half times more likely to receive subsidized rice. Using the observed pattern of static and dynamic benefit incidence to compare the two programs and a uniform transfer, we show that if the middle-income households are sufficiently risk averse the additional insurance value of programs with superior dynamic benefit incidence can alter the median voter outcome in favor of more targeted programs.