Focus on cash transfer programs: assessing the eligibility of the Bolsa Família program in Brazil

Income transfer programs are important public policies in fighting poverty and reducing inequality. However, such a strategy is often criticised as being ineffective, as there is a risk that part of the resources is not destined for the poorest. This article aims to assess the current eligibility criteria of the Brazilian Bolsa Família program (BFP), which considers only self-reported income. Targeting indicators are proposed using the coverage and leakage rates of the program considering the current criterion and simulated criteria, defined according to the percentiles of poverty and propensity scores of a logit model based on the probability of belonging to the program’s target audience. We evaluate the use of an alternative model for selecting beneficiaries and whether this could reduce the leakage rates of the program and increase the degree of targeting by transferring resources to those in the most vulnerable situation. Results indicate the program has a limited budget which is not enough to cover all the enrolled even if there was perfect targeting, i.e., the budget allocated to the BFP would cover almost 70% of the poor population. Moreover, we conclude that the current self-reported income criterion is less expensive and more effective than the proposed criterion based on the propensity score, considering the structure of the current program implementation system and the form of verification of the data.