TARGETING FAMILIES AFFECTED BY HIV AND AIDS 29 Proxy means test methods have accuracy advantages due to the use of
large quantities of data applied in a model. They also have several draw- backs. First, they can be costly, although these costs fall over time. In Hon- duras’s CCT, the cost of targeting as a percentage of total program costs was about 23 percent (although this also included beneficiary incorporation costs). In Mexico’s CCT, the cost of targeting as a percentage of program costs started out at a high of 61 percent in 1997, then fell to 47 percent in 1998, to 26 percent in 1999, and to 3 percent in 2000. In Nicaragua’s CCT, targeting costs similarly fell from 20 percent in 2000 to 2 percent in 2002. This drop-off represents the fact that most of the targeting activities go on early in the program, followed by incorporation of the beneficiaries and then delivery of transfers (Caldés, Coady, and Maluccio 2006, 828). In this sense the first year’s high costs can be seen as representative of the targeting process, but these can be averaged over a number of years, assuming that beneficiaries mostly remain in the program. Second, the administration of a proxy means test with the accuracy found
in the Latin American cases requires a high level of technical and administra- tive capacity, beyond what is likely to be available in many poor parts of the world. The formulation of a proxy means test model as normally used also requires the availability of a representative household survey dataset (at a national or regional level, depending on the geographic focus of the program) with a comprehensive set of variables (indicators of household welfare) that are highly correlated with household income or total consumption expendi- tures. However, depending on its objective, a proxy means test and its analy- sis can range from very complicated to very simple; a small survey uses a set of indicators chosen to be good proxies for poverty (or for AIDS-affected). The simpler end of the spectrum is often what is carried out by committees in a community-based targeting process (discussed later). A third issue is that proxy means tests often use a generic measure of poverty based on an index from the field of economics. This method is con- sidered state of the art and usually results in good targeting based on the indicators chosen. The problem is that these indicators and the formulas used for weighting them may yield results that differ significantly from local per- ceptions of relative need. Community-based targeting processes, on the other hand, draw on local people’s knowledge of local norms and individual circumstances and reflect local priorities and perceptions of fairness, need, and entitlement, which can differ widely from what is captured through sta- tistical measures (Adato and Haddad 2002; Zambia, MCDSS/GTZ 2006). In Nicaragua’s CCT, for example, the quantitative evaluation of the proxy means test found “acceptably low” errors of exclusion (see the previously men- tioned figures), but in the qualitative evaluation, 81 out of 125 households
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