Does transparency improve public program targeting? Evidence from India's old-age social pension reforms

Abstract

Public program targeting is particularly challenging in developing countries. Transparency in eligibility rules for the implementation of social programs could be an effective measure to reduce mistargeting. While prior studies have examined the relevance of transparent delivery mechanisms, we focus on the transparency of eligibility criteria that can be reformed at relatively low cost. India’s social pension reforms in the late 2000s provide the opportunity to examine the effect of a change in these criteria. Using two rounds of the India Human Development Survey along with extensive administrative information, we test whether increasing the transparency of eligibility criteria reduces the mistargeting of social pensions. We thereby allow for an error band, and we carefully control for design effects due to a general increase in the number of pensions and eligible individuals. Our results confirm the relationship between transparency of eligibility criteria and targeting performance and are robust to different specifications of the transparency measure and the introduction of a tolerance band