The allocation of benefits under uncertainty: a decision-theoretic framework

R H Abul Naga

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

We consider the problem of targeting benefits when the decision-maker cannot ascertain an applicant's income, but can assign probabilities with respect to the level of his resources. A decision-theoretic framework is used to analyze the decision to grant a benefit of fixed size. The proposed rule consists in balancing the expected social cost of denying assistance to the needy (type-I error) against that of granting a benefit to a non-poor (type-II error). Thus, when the costs of type-I errors are on the rise, or those of type-II errors fall, it becomes more desirable to increase population coverage of the programme. (C) 2002 Elsevier Science B.V. All rights reserved.

Original languageEnglish
Pages (from-to)873-893
Number of pages21
JournalEconomic Modelling
Volume20
Issue number4
Early online date11 Sep 2002
DOIs
Publication statusPublished - Jul 2003

Keywords

  • poverty
  • imperfect information
  • allocation of benefits
  • poverty-alleviation
  • welfare
  • information

Cite this