Operational Assessment of Monetary Poverty by Proxy Means Tests

Despite the concern among donors, governments and practitioners about their success in reaching the poor, the lack of reliable low-cost tools makes it difficult to determine if development programs meet their poverty targeting objectives. This study develops an operational assessment tool of monetary poverty for Peru. In a comparative step-by-step procedure, it discusses aspects like the practicability of indicators, methods for indicator selection, comparisons of logistic, least-square, and quantile regression, the poverty classification of households, robustness of the tools over time and across sub-groups, and what Receiver Operating Characteristic (ROC) curves can contribute. In doing that, it also provides a general methodological pathway for the development of tools used for time and cost-saving targeting assessments.