How should transfers in a social assistance programme be targeted?

Social assistance programmes are typically targeted at a certain group within the population. The two main targeting methods are categorical targeting and means-testing.

The most common example of categorical targeting is by age: many continental European countries provide universal child allowances to children, or social pensions (noncontributory) to the elderly lacking old-age or survivorship pension. Means-tested programmes are given only to low-income households. Basically, only households with an income below the programme eligibility threshold, and in many cases, whose endowment with assets is less than a given threshold, qualify for the program. In other words, benefits are provided to households that are 'poor enough'.

Means-testing requires deciding whether an individual, family or household will be eligible for assistance. It can be based on income levels only or on a combination of income and assets. The income and assets of households or individuals can be assessed on a monthly or annual basis, depending on the period of eligibility. Different types of assets may be used for rural versus urban households. Income and asset levels may be adjusted according to changes in living standards every five years. Proxy means-testing uses only one or two criteria as a basis for determining eligibility, rather than detailed assessment against many criteria (for example, all landless people living in rural areas, all families living in houses with earthen floors). Targeting assessments that are household based can be further refined to only certain groups or individuals within all the households that live below a poverty line. Targeting can be tapered, rather than using a fixed threshold for income or the value of assets. Targeting methods can therefore include provisions for encouraging income generation so as to alleviate poverty above the subsistence threshold. This would usually equate to an 'income test or assets free area', perhaps up to 25 percent of the benefit level, or excluding houses from assets. Tapering can encourage more active responses from beneficiaries to improve their well-being, such as undertaking parttime work while still receiving some form of social assistance, e.g. health care. Generally, the more detailed the criteria included as part of the targeting mechanism, and the more complex the formulae used to determine eligibility, the costlier it is to administer the programme.

What is social assistance?

The following are some definitions given of social assistance:

The set of non-contributory social programmes for low-income households or other vulnerable groups. In general, social assistance programmes are of two types: transfer programmes and social services. o Transfer programmes provide cash or in-kind benefits for individuals or families in the programme. Example of transfer programmes are child allowances, guaranteed minimum income programmes, food stamps and housing or heating allowances. o Social services provide specialized assistance targeted toward vulnerable individuals or families in or at risk of social exclusion due to low education or skills, disability, alcohol or drug addiction; or for orphans or single elderly people

unable to care for themselves. These programmes, typically referred to as social assistance programmes in the European Union, are known as welfare programmes in the U.S. and social safety net programmes in developing countries. OECD

Social assistance involves non-contributory transfers to those deemed eligible by society on the basis of their vulnerability or poverty. Examples include social transfers and initiatives such as fee waivers for education and health, and school meals.