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Forget the weights, who gets the benefits? How to bring a poverty focus to the economic analysis of projects

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  • David Potts

    (DPPC, University of Bradford, UK)

Abstract

This paper examines the way in which the distributional impact of projects has been treated in the cost-benefit analysis literature. It is suggested that excessive emphasis has been given to the estimation of distribution weights in the context of single figure measures of project worth and that more attention should be paid to estimation of the distribution effects themselves. If projects really are to have some impact on poverty it is important that some attempt is made to measure what that impact is. Such an attempt requires both systematic measurement of direct income effects as well as the possibility of measuring indirect effects where these are expected to be important. An approach is suggested in which direct measurement of income effects can be adjusted using shadow price estimates to determine indirect income effects. The approach is illustrated with the example of a district heating project in the Republic of Latvia. Copyright © 1999 John Wiley & Sons, Ltd.

Suggested Citation

  • David Potts, 1999. "Forget the weights, who gets the benefits? How to bring a poverty focus to the economic analysis of projects," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(4), pages 581-595.
    • Handle: RePEc:wly:jintdv:v:11:y:1999:i:4:p:581-595
    DOI: 10.1002/(SICI)1099-1328(199906)11:4<581::AID-JID597>3.0.CO;2-J
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    References listed on IDEAS

    as
    1. Harberger, Arnold C, 1978. "On the Use of Distributional Weights in Social Cost-Benefit Analysis," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 87-120, April.
    2. Balassa, Bela, 1976. "The 'Effects Method' of Project Evaluation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 38(4), pages 219-231, November.
    3. Amin, Galal A., 1978. "Project appraisal and income distribution," World Development, Elsevier, vol. 6(2), pages 139-152, February.
    4. Balassa, Bela, 1977. "The 'Effects Method' of Project Evaluation Once Again," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 39(4), pages 345-353, November.
    5. MacArthur, J. D., 1978. "Appraising the distributional aspects of rural development projects: A Kenya case study," World Development, Elsevier, vol. 6(2), pages 167-193, February.
    6. Stewart, Frances, 1978. "Social cost-benefit analysis in practice: Some reflections in the light of case studies using Little-Mirrlees techniques," World Development, Elsevier, vol. 6(2), pages 153-165, February.
    7. Chambers, Robert, 1978. "Project selection for poverty-focused rural development: Simple is optimal," World Development, Elsevier, vol. 6(2), pages 209-219, February.
    8. Chervel, Marc, 1977. "The Rationale of the Effects Method: A Reply to Bela Balassa," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 39(4), pages 333-344, November.
    9. Mirrlees, J. A., 1978. "Social benefit-cost analysis and the distribution of income," World Development, Elsevier, vol. 6(2), pages 131-138, February.
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    Cited by:

    1. Elio H Londero, 2004. "Poverty Targeting Classifications and Distributional Effects," Public Economics 0407012, University Library of Munich, Germany.

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