PROXY MEANS TESTING: AN ALTERNATIVE METHOD FOR

POVERTY ASSESSMENT
SURAPONE PTANAWANIT

Faculty of Social Administration, Thammasat University, Bangkok, Thailand

E-mail: suraponep@hotmail.com

Abstract- This article discusses the experiment of a proxy means test for assessing poverty levels in Thailand. It explains
why a proxy means test instead of a conventional income or assets test is more applicable to a developing country like
Thailand where income data are rather inaccurate. The main point of the article is its discussion in details on how the study
develops the proxy means test. Apart from suggesting a way by which poverty can be measured by the proxy means test, the
article also explains how this instrument can assess clients’ eligibility for social assistance benefit.

Keywords- Poverty Assessment, Eligibility Assessment, Proxy Means Test, Social Assistance.

I. INTRODUCTION another problem with which we are most familiar.

Direct poverty assessment such as a means test and an
assets test has been a common tool for evaluating the
right to social assistance benefit in welfare states.
Although this direct poverty assessment has become a
useful instrument for social assistance arrangements, its
applications in many occasions bring about negative
consequences. As direct poverty testing is concerned
with financial status, eligible clients are labeled as
people with poverty. This labeling problem is
sometimes believed to be the main cause of a low take-
up rate. van Oorschot and Schell (1989) indicate in their
study that the decline in the social assistance take-up rate
might be the result of social labeling in Western
European countries such as the UK, the Netherlands,
and Germany. Their study also showed that the non-
take-up rate for the family income supplement in the UK
was as high as 46%.
Developing countries encounter different problems of
direct poverty assessment. A lot of people in these
countries particularly those in poverty do not declare
their incomes and wealth to the authorities. This results
in inadequate data on poverty incomes and inaccurate
poverty lines. Professional workers; therefore, are
unable to construct a direct poverty test or to base their
decisions to provide or to withhold welfare benefit on
clients’ financial status. Inapplicability of direct poverty
assessment also arises because social welfare in
developing countries is independent from taxation. As a
consequence, use of income or assets data as criteria for
providing social assistance benefit is not possible.
Literature has showed that direct poverty measurement
like means testing has been a tool for determining the
entitled amounts of social assistance benefit in most of
the welfare states for a long time. Arguments in favor of
the means test system are efficiency and adaptability.
Despite these advantages, means testing is not above
criticism. Legros (2009) points out the complexity and
unfairness of the means tested system in France. He also
mentions that the means tested benefit makes people
dependent on the system in the long-term.
Stigmatization caused by means testing seems to be
Stigma discourages the target people to exercise their
rights and results in a waste of welfare resources due to
a low take-up rate of means tested benefit (see Moffitt
1983; Pudney, Hancock, & Sutherland 2006)
In developing countries, limited application of means
tests is not because of its complexity and cause of
stigmatization; but unreliable income data and
inaccurate poverty lines are the main reason. Kidd &
Wyld (2011) argue that targeting the poor, especially, in
developing countries is complicate because their large
informal economies make it difficult to accurately assess
people’s incomes. Other authors including Johannsen
(2006) mention similar limitations of using proxy means
tests for targeting the poor and for providing welfare in
these countries. Instead of encouraging use of means
testing, some international organizations tend to support
application of a proxy means test in developing
countries. A paper published by FAO (see Tiba 2011),
for example, suggests that means testing works best only
in settings where declared income is verifiable; but in
developing countries where income information is
notoriously difficult, proxy means testing becomes an
alternative way to assess the wealth status of an
individual or a household. According to a UN’s
publication (Ortiz 2007), proxy means testing is cheaper
than means tests and allows wider participation
opportunities for community groups and local
governments. One of the World Bank’s publications
(Grosh & Baker 1995) indicates that, in targeting the
poor, social workers gather many aspects of
information, thus, systematic use of collected data may
improve targeting outcomes and increase the fairness
and transparency of social programmes.
Chile is known as the first country where the proxy
means test was originated (Kidd & Wyld 2011; Grosh &
Baker 1995). The Chile model employed a form filled
out by a social worker to collect information on
household characteristics such as location, housing
quality, household composition, and the works done by
the household members. Answers to these questions are
prescribed with scores which will help predict the
poverty or income level of each household. Other

Proceedings of Academics World International Conference, Copenhagen, Denmark, 23rd-24th October 2016, ISBN: 978-93-86083-34-0
4
 Proxy Means Testing: An Alternative Method For Poverty Assessment
developing countries such as Bangladesh (Sharif 2009),
the Philippines (Mapa & Albis 2013), Uganda
(Housson, Zeller, Alcaraz, Schwarze, & Johannsen
2007), and Peru (Johannsen 2006), then, adopted the
proxy means testing as the method of eligibility
assessment.
II. OBJECTIVES
This article aims to show how an indirect method for
poverty assessment or the so called proxy means testing
was developed. In conjunction with the first objective,
the article will suggest to welfare agencies that this
proxy means testing can be a valid testing method for
social assistance eligibility.
III. METHODOLOGY
The research was designed as a survey research which
collected data from people in communities and from
persons who came for social assistance benefits
throughout the country. The main aim of the survey was
to test whether the indicators contained in the research
instrument were valid enough to predict or to determine
poverty levels. To achieve thid aim, the research
launched the following procedure.
3.1. Research Instrument Design
The research began with a review of literature
concerning proxy means testing and group discussions
with social workers, welfare administrators, and welfare
recipients. The researcher expected that the literature
review and group discussions would suggest a number
of indicators that could predict a poverty level. After the
literature review and group discussions, the researcher
decided to select 10 indicators for measuring poverty
levels.
These 10 indicators consisted of educational levels,
personal illness, age, marital status, the burden of caring,
employment, debts, home ownership, housing
conditions, and property owned. The researcher, then,
formed these 10 indicators into a proxy means test
which would become the instrument for the field survey.
The proxy means test prescribed a score to each answer
of each question (see Box 1). The score was, actually,
the number of the answer choice. If the respondent had
no personal illness, for example, he/she would tick
option ‘three’ under the question about ‘current personal
illness’ and would obtain a score of three. The total sum
score of all items was a hint of the financial status of the
respondent.
3.2. Populations and Sampling
The country-wide survey covered people residing in
communities and potential clients who came to the
Social Development and Human Security Provincial
Offices for social assistance benefits during the time of
data collection. As the study was unable to construct a
sampling frame, a non-probability sampling namely
Proceedings of Academics World International Conference, Copenhagen, Denmark, 23rd-24th October 2016, ISBN: 978-93-86083-34-0
5
judgmental sampling with a sample size of
approximately 3000 respondents in each population was
applied.
3.3. Data Collection
Social workers and welfare officers who worked with
the Social Development and Human Security Provincial
Offices around the county were responsible for
purposively choosing respondents in communities and
social assistance clients to respond to the proxy means
tests. The study intended to draw representative samples
from the two populations by trying to cover respondents
from various socio-economic statuses in terms of
gender, age, education, employment, income etc.
3.4. Data Analysis
3.4.1. Validation of the Proxy Means Test The
validation took into account the capability to
differentiate social assistance clients who were
presupposed to be persons in poverty from people in
communities who were believed to be more financially
secure. The differentiation analysis compared the proxy
means test data between the two sample groups. Only
the indicator that showed a difference of at least 10% in
terms of either an average value or a proportion between
the two samples would be kept as a question item in the
final version of the proxy means test.
3.4.2. Proxy Means Test Criteria As the indirect poverty
assessment by the proxy means test must classify people
according to their financial security, the data analysis
needed to set up criteria for assessing people’s financial
status, To achieve this purpose, the analysis compared
the average proxy means test scores between the
samples and related them to the poverty ratios among
Thai people.
IV. RESULTS AND DISCUSSION
4.1. Validity of the Proxy Means Test Indicators
All the 10 proxy means test indicators exhibited
apparent contrast between the two sample groups above
the predetermined 10% criterion set up prior to the data
analysis. This means that each proxy means test
indicator is, to a large extent, able to differential social
assistance clients from people in communities. In other
words, the ten proxy means test indicators are capable of
differentiating people in poverty from those who are
more financially secure.
Consequently, we can identify people in poverty without
paying attention to their incomes but by using the 10
proxy means test indicators to assess their socio-
economic status instead. In sum, people in poverty are
likely to have the 10 following characteristics in
common:
 Have a health problem
 Are below 20 years of age or older than 60 years old
 Have a lower educational background
 Tend to be divorced or be a widow/ widower
 Proxy Means Testing: An Alternative Method For Poverty Assessment
Box 1 The Proxy Means Test

Proceedings of Academics World International Conference, Copenhagen, Denmark, 23rd-24th October 2016, ISBN: 978-93-86083-34-0
6
 Proxy Means Testing: An Alternative Method For Poverty Assessment
 Have insecure home ownership
 Live in poor housing conditions
 Own limited property
 Have insecure employment status
 Have the burden of caring
 Are in debt
3.5. Proxy Means Test Criteria
Table 1 shows mean scores and standard deviations of
the social assistance client group, the people in
community group, and the whole sample group. The
mean score of the social assistance clients is
approximately 34.37 with a standard deviation of 10.93.
This mean score is almost equal to the average value of
the whole sample minus ½ of its standard deviation
(42.96-15/2). The people in community group who are
most economically secure retains the highest average
proxy means test score of 51.59 with the most dispersive
standard deviation of 13.50.
If we take the proxy means test scores of the social
assistance client group (the mean score of 34.37 and its
standard deviation of 10.93) as criteria for determining
the national or whole country poverty levels, we will
find a few interesting findings in relation to income
poverty in Thailand. First, the World Bank (2015)
reports that 12.60% of the Thai population earned
income below the national official poverty line. This
poverty ratio is almost equal to the figure of 13.6% of
those who score lower than 25 in the whole sample
group. The score of 25 is actually the average proxy
means test score in the social assistance client group
minus ½ of its standard deviation (34.37-10.93/2).
Therefore, the score of 25 can be comparable with the
Thai official poverty line.
The same World Bank Report also mentions that the
income poverty headcount ratio at $4 a day (PPP) in
Thailand is approximately 30.97%. This ratio is very
close to 32.2% of the whole sample who score lower
than 34.97 which is the average proxy means test score
of the social assistance client group. As a consequence,
the proxy means test score of 34.97 or approximately 35
can be comparable with the Thai poverty at the
international poverty line (PPP).
Table 1. Average Proxy Means Test Scores and Their Standard
Deviations
CONCLUSION AND RECOMMENDATIONS
In Thailand where information about incomes is
inaccurate, the conventional methods of poverty
measurement such as poverty lines, an income test, and
an assets test are rather impractical. This study,
Proceedings of Academics World International Conference, Copenhagen, Denmark, 23rd-24th October 2016, ISBN: 978-93-86083-34-0
7
therefore, intended to introduce proxy means testing by
which poverty levels are indirectly measured as an
alternative method for poverty assessment. By basing
its initial analysis on literature and focus groups, the
study developed the so called proxy means test which
consisted of 10 socio-economic indicators for
assessing people’s financial status. The study, then,
conducted a nation-wide survey to validate the proxy
means test. The findings indicated a number of
conclusions. Indirect measurement by the proxy means
test comprising socio-economic indicators can be an
alternative to direct poverty measurement by income or
assets testing. The ten indicators proved to be able to
measure poverty levels or to differentiate people in
poverty from those with economic security comprises
employment status, health status, age, education,
marital status, the burden of caring, debt burdens,
property owned, home ownership, and housing
conditions. The analysis of the national survey data in
relation to the World Bank statistics indicated that the
proxy means test scores from the social assistance
clients could be baselines for measuring poverty levels.
The value of 25 derived from the average proxy means
test level scored by the social assistance clients minus
½ of its standard deviation, for example, could be used
as the Thai national poverty threshold. This threshold
can be compared with the national income poverty line
which is the conventional direct poverty measurement.
Measurement of poverty by the proxy means test
shows more than economic status because it reveals
socio-economic aspects of deprivation. Proxy means
test scores, therefore, represent depth of poverty which
is useful for both social and economic development.
Apart from using the proxy means testing for indirect
assessment of poverty, this paper would suggest
another application of this indirect poverty
measurement in judging social assistance eligibility.
From the above findings particularly that of the social
assistance client group, the study can derive a proxy
means test scale for allocating general social assistance
benefit. Box 2 shows how the scale functions to
determine an eligible amount of social assistance
benefit based on client’s proxy means test score.
Clients, whose proxy means test scores are in the Free
Area or below the threshold of 35, are entitled to a full
allowance. The score of 46 is the cut-out point at
which the provision of an allowance stops as persons
who score 46 or higher will be considered financially
secure, thus, ineligible for any amount of benefit.
Clients with scores from 36 to 46 are entitled to an
allowance determined either by a rigorous or a lenient
eligibility formula. The rigorous formula gives a
smaller amount of benefit than that computed by the
lenient eligibility one. The rigorous formula is
appropriate for the situation where welfare agencies
have limited budgets or want clients to rely more on
market incomes than on social assistance benefit.
Welfare agencies may also choose to provide eligible
clients with benefit larger
 Proxy Means Testing: An Alternative Method For Poverty Assessment
Box 2 Application of the Proxy Means Test

than nominal amounts by applying the lenient formula
in determining social assistance allowances.
The welfare agency needs to declare a full or a
maximum allowance (FA) before applying the proxy-
means-test formulas. The threshold (Th) and cut-out
(CS) scores are the static terms of 36 and 46. However,
the threshold and cut-out scores change corresponding
to national socio-economic circumstances. This
implies that the proxy means test scale and formulas
must be adjusted from time to time.
A social worker obtains the client’s proxy-means-test
score or the PMTS after interviewing him/her
according to the proxy-means-test questions. The
eligible amount of benefit (EA) is, then, derived by
substituting these terms in either the rigorous or the
lenient formula. If the current full allowance is 5,000
baht/month (33 Thai baht = 1US$) and the client
scores 38 from the proxy means test, for example,
his/her rigorous and lenient allowances will be 4,000
and 4,782 baht/month respectively.
REFERENCES
[1]. Grosh, M., & Baker, J. (1995). Proxy Means Tests for
Targeting Social Programs: Simulations and Speculation,
LSMS working paper no.118. Washington D.C.: the World
Bank.
[2]. Houssou, N., Zeller, M., Alcaraz, V.G., Schwarze, S., &
Johannsen, J. (2007). Proxy Means Tests for Targeting the
Poorest Households Applications to Uganda. Paper presented at

Proceedings of Academics World International Conference, Copenhagen, Denmark, 23rd-24th October 2016, ISBN: 978-93-86083-34-0
8
 Proxy Means Testing: An Alternative Method For Poverty Assessment
the 106th seminar of the EAAE pro-poor development in low
income countries: Food, agriculture, trade, and environment,
Montpellier, France.
[3]. Johannsen, J. (2006). Operational Poverty Targeting in Peru-
Proxy Mean Testing with Non-income Indicators. Brasilia
(Brazil): International Poverty Centre (the United Nations
Development Programme).
[4]. Kidd, S.W., & Wylde, E. (2011). Targeting the Poorest: An
Assessment of the Proxy Means Test Methodology. Canberra:
Agency for International Development.
[5]. Legros, M. (2009). France: Minimum Income Schemes: From
Crisis to Another, The French Experience of Means Tested
Benefits. Retrieved from file:///C:/Users /Get/ Downloads
/France_1_ 2009_EN%20(3).pdf
[6]. Mapa, D.S., & Albis, M.L.F. (2013). New Proxy Means Test
(PMT) Models: Improving Targeting of the Poor for Social
Protection. Paper presented at the 12th National Convention on
Statistics (NCS), Mandaluyong City, The Philippines.
[7]. Moffitt, R. (1983). An Economic Model of Welfare Stigma.
American Economic Review, 73(5), 1023-1035.
[8]. Ortiz, I. (2007). Social Policy. New York: Department for
Economic and Social Affairs of the United Nation.

Proceedings of Academics World International Conference, Copenhagen, Denmark, 23rd-24th October 2016, ISBN: 978-93-86083-34-0
9
[9]. Pudney, S., Hancock, R., & Sutherland, H. (2006). Simulating
the Reform of Means-tested Benefits with Endogenous Take-
up and Claim Costs. Oxford Bulletin of Economics and
Statistics, 68(2), 135-166.doi:10.1111/j.1468-0084.2006.
00156.x
[10]. Sharif, I.A. (2009). Building a Targeting System for
Bangladesh Based on Proxy Means Testing. Washington D.C:
the World Bank.
[11]. Tiba, Z. (2011). Targeting the Most Vulnerable: Implementing
Social Safety Nets. In A. Prakash (Ed.). Safeguarding Food
Security in Volatile Global Markets (509-528). Rome: Food
and Agriculture Organization of the United Nations.
[12]. van Oorschot, W.J.H., & Schell, J. (1991). Means Testing in
Europe: A Growing Concern. In M. Adler, C. Bell, J. Clasen, &
A. Sinfield (Eds.), The Sociology of Social Security (187-221).
(Edinburgh education and society series). Edinburgh:
Edinburgh University Press.
[13]. World Bank. (2016). Poverty and Equity Database. Retrieved
from http://databank.worldbank.org/data/reports.aspx?source =
poverty-and-equity-database