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An Efficiency Comparison of Means Testing Tools: Money Metric or Counting Approach?

Author

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  • Martina Menon
  • Federico Perali
  • Eva Sierminska

Abstract

As part of the Europe 2020 strategy, European member states have committed to modernize and harmonize their welfare systems and to improve the quality of the means testing tools adopted to correctly identify the beneficiaries of welfare policies. This study contributes to the literature on means testing by implementing and comparing two alternative multidimensional targeting approaches: a money metric and a counting measurement of poverty. The two approaches aggregate poverty dimensions and implement inter-household comparisons of wellbeing differently. The study shows that in terms of targeting efficiency the approach based on the money metric is superior. The comparison is relevant both from an empirical and a policy point of view because a unified means testing tool would pave the road towards harmonized welfare policies across European countries.

Suggested Citation

  • Martina Menon & Federico Perali & Eva Sierminska, 2017. "An Efficiency Comparison of Means Testing Tools: Money Metric or Counting Approach?," CHILD Working Papers Series 57 JEL Classification: D1, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    • Handle: RePEc:cca:wchild:57
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    References listed on IDEAS

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