Part I: Even in Times of Stability, Welfare Measurement for Eligibility Determination Is Complex

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The second part introduces dynamics and shocks. It notes that welfare is dynamic, with many people being somewhat better or worse off from time to time. Even idiosyncratic changes add a layer of challenges for social assistance programs. Large covariate shocks, such as natural disasters and economic crises, step those up considerably. The chapter reviews ideas and highlights fruitful approaches with recent experiences.

Part I: Even in Times of Stability, Welfare Measurement for Eligibility Determination Is Complex

Since social assistance is often motivated by the need to address poverty and inequality, the literatures are intertwined. The analytic literature shapes the agenda on the issues that must be decided (and sometimes reexamined) as programs move to implementation.

For Whom Are We Trying to Measure Welfare?

Poverty assessments take the “household” as the basic unit of data collection and analysis—people living together in a dwelling and sharing basic expenses or cooking together,1 with welfare (usually measured by consumption or income) usually represented in per capita terms, sometimes with adjustments for adult equivalence and/or economies of scale in household size.2 Similar considerations of adjustments to eligibility thresholds and benefit levels may be made in social assistance programs.

In social assistance, the “assistance unit” is not always defined in the way that surveys define the “household.”3 Sometimes the assistance unit is an individual—a child for a child allowance, an elderly person for a social pension, or a person living with disability for a disability allowance. However, often the assistance unit is the nuclear family—parent(s) and children— although nuclear families can live in larger compound households, especially traditional multigenerational families that incorporate grandparent(s) with at least one adult child with a spouse and children. In the 89 developing countries with data available in the Global Monitoring Database, nuclear families (a couple and children) comprise only 31 percent of households, and 41 percent of those with welfare below the $1.90/day/person poverty line (Munoz Boudet et al. 2018). Thus, social assistance policy must consider many more complex family structures (see figure 3.1).

The definition of the assistance unit is important for eligibility decisions, as examination of a basic multigenerational household illustrates. Consider a household with an elderly couple, an adult son and his wife and children, and a young adult daughter. The adult son is formally employed and has a middle-class income. The dwelling is commensurately nice and registered

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Figure 3.1 Distribution of Poor (by the $1.90 Metric) Households, by Demographic Household Typology

Adult couple—with children (30.6%), 41.5%

share of all households that are extreme poor share of all households

Source: Munoz Boudet et al. 2018.

Adult couple—with children and other adults (17.1%), 28.2%

share of all households that are extreme poor share of all households Other combinations of adults—with children (4.6%), 7.2% One adult— with children (3.2%), 6.1%

Combinations of adults (other than a couple) One adult only—no children (11.2%), 2.8%

Multiple adults, only female—with children (1.1%), 2.4% Senior(s) only —no children (6.2%), 2.1% Adult couple— no children One adult, male— with children

in the name of the adult son (and maybe his wife). The adult daughter earns an occasional income, maybe babysitting or as a temp worker. If the members of this household are all viewed as one assistance unit, then all income and assets will be pooled, and any economies of age and scale assigned. The son’s good steady income or caliber of housing might find the household nonneedy if viewed as a whole. But if viewing the household members as three units (elderly couple, nuclear family, and single individual), the calculus could change. The young adult daughter could be viewed as having small, irregular income and no housing assets. She might be eligible for income support or job training or placement. The elderly couple might be eligible for a means-tested social pension. The bureaucratic/ administrative concept of an assistance unit may be related to the purposes of a program or to the nationally pertinent vision of what constitutes a “normal” or “good” life in terms of family structure and independence.

Types of Households Although who shares a dwelling has a basis in culture and family bonds, it also responds to economics. That is, nuclear families or individuals move in and out in response to economic opportunities or pressures, and this has implications for eligibility determination processes. In addition to multigenerational households and whether to consider them as one or more assistance units, social assistance policy must consider various other fairly

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common situations. Defining optimal rules involves difficult choices with possible trade-offs, and so there is no single blanket recommendation that applies across all circumstances or that all people would agree on in a given circumstance. Understanding how social assistance and household formation interact may be important for equity, for the goals of the program, and to understand possible unintended consequences.

Nonmarital unions. Formal marriages provide a “base case” for policy as they are clearly defined, formally recorded, and pair norms of affection and economic support. But real life is often less clear-cut, and in many countries, formal marriage is not ubiquitous or it is on the decline.4 Thus, welfare policy must account for varied living situations and how to handle eligibility determination for each. For example, should the noncustodial parent’s child support payments count as part of the family’s income in the social assistance unit in which the child resides? Should such payments be discounted from the income of the paying noncustodial parent? How can the social assistance administrator track child support payments? How often/by how much would social assistance benefits be adjusted if child support were not paid regularly? Should the income of a resident (new) partner of the custodial parent be counted? And if so, how is residency or partnership determined? The wording of these questions shows that they pertain in more force for means-tested programs trying to fine-tune measures of income than for proxy means-tested programs that rely on markers of housing characteristics and assets. The questions show the possible imprecisions in thinking about unmarried mothers or even widows as necessarily being reliant on only their own single incomes as some may have informal partners who contribute to the expenses of a shared household.

The issue of how to define social assistance policy to meet various goals— to treat couples of similar economic means similarly irrespective of the formality of their union, to encourage/not discourage marriage, and to avoid intrusive inspections or unclear rules—has been a significant and much debated issue. This has been especially true of US welfare policy for several decades, but the issue pertains in other contexts as well (see, for example, Moffitt, Phelan, and Winkler [2020] and Wilcox, Price, and Rachidi [2016]). Various European countries have moved further than the United States has toward reducing “marriage penalties” by considering the income of nonmarital partners, but countries still struggle with finding definitions that are reasonably clear and observable (Besharov and Gilbert 2015).

Polygamous households. There is no precise tally of the practice of definition of social assistance units for polygamous households, but the impression is that it is not uncommon but not ubiquitous in social assistance programs to define the assistance unit as the combined household of a husband, all wives, their children, and any additional members, especially where they live together in a compound. To treat the household as one

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assistance unit implies a high degree of sharing of resources, although some research suggests that resources are not fully pooled among husbands and co-wives,5 with the implication that treating each wife and her children as an assistance unit may be desirable, especially for programs aiming at direct improvements of children’s human capital outcomes. However, this option may be more difficult in a data collection sense.6

Informal foster children.7 Children may not always live with their biological parents. For example, older children may live with other relatives, at least for defined time periods. Those relatives may be able to provide better material care, such as more food or closer access to schools, or even out caregiving or household labor while the children are still within the embrace of (extended) family (see, for example, Akresh 2009). Such traditions were strong especially in Sub-Saharan Africa8 and became an important means of coping when the HIV/AIDS epidemic hit the continent so hard, with not only children who lost both parents but even many of those who lost one residing with family other than the surviving parent (see, for example, Ardington and Liebrandt [2010] and Penglase [2021]). Fluidity in family structure makes it all the more important to understand how to target social policy—for example, to orphans per se, to all children in families that host orphans, or to children in poor families more generally, especially as the overlap varies substantially among countries (Ainsworth and Filmer 2002). It is possible that COVID-19 will bring a new increment to such arrangements and across a wider set of countries due to families facing the loss of parental or grandparental caregivers. Hillis et al. (2021) and Unwin et al. (2022) estimate that globally, in the first 20 months of the pandemic (up to October 31, 2021), 5.0 million COVID-19 deaths had occurred, and 5.2 million children had lost a parent or caregiver due to COVID-19–associated deaths; 3 of every 4 children affected by orphanhood lost their fathers; 2 of every 3 children whose parents died were adolescents. Affected countries cover the globe, with highest rates of paternal orphanhood in India, Mexico, Peru, and South Africa.

“Guest” households. At the time of this writing, COVID-19–related eviction protections are expiring in the United States. It is expected that with many workers having lost their jobs or suffered huge reductions in earnings, some of the families they support will lose the housing they could afford before the crisis. Some people may be able to find lower cost housing and continue to live independently, and some (hopefully very few) may end up homeless. A goodly share will probably move in with others— family, friends, or roommates.9 This shock absorption has worked around the world in response to many previous waves of economic shocks, natural disasters, and migrations. (In Spanish, the term for the economically needy “guest” households lodging within a previously established one is los allegados, or those who have arrived.) The new arrivals’ “identity” and

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family finances will remain at least somewhat and maybe fully separate from those of the “host” family in which they land, at least initially and probably more markedly when the prior degree of autonomy was greater or social relationship weaker. The social assistance policy in some countries considers the guest and host families as qualifying as separate assistance units. Operationalizing that is fairly straightforward for means-tested programs, by counting the income of each member of the assistance unit. For programs that base eligibility on geography or consider the characteristics of the dwelling as proxies for welfare, it is more difficult to operationalize. Such programs normally measure the characteristics of the host family and do not reflect the independent welfare of the guest family. This situation may be tricky for programs that consider housing need—is the guest family well lodged or a priority for shelter or housing programs?

Combined employer/staff households. In some countries, the employment of live-in domestic staff is not uncommon. Socially, there is little question that the employers and staff belong to different assistance units, and, in general, families that are well-off enough to employ live-in domestic staff are not the population of interest for many social assistance programs. But their staff may be, especially the children of the staff. Thus, issues that are similar to those of guest households arise. Will the targeting method be able to differentiate the welfare of the staff household given that it may reside in a dwelling with amenities in a good neighborhood?

The housing unit. Occasionally, it is a feature of the dwelling such as the electricity or water meter that de facto defines the assistance unit, for example, programs that provide reduced tariffs (or even outright transfers) to those whose meters record low usage. Here the meter is what is observable, not how many people use it or how closely they are related. The use on the meter is an easily observed metric of welfare, but it becomes less precise to the degree that meters are shared with multiple households; poorer households, which are likely to be larger and thus use more water or electricity, or to be part of pirate connection schemes; or households that have no utilities at all (see, for example, Komives et al. [2005]; Ruggeri Laderchi [2014]).10

Individuals Several of the common social assistance programs are named with a focus on individuals rather than families or households—child allowances, social pensions, and disability and veterans’ benefits. In practice, some programs with such names rely only on categorical targeting and so really have only the individual as the unit of social assistance. However, many programs also have some sort of differentiation of eligibility or benefits by economic need as well. Thus, such programs require all the details for defining individuals’ wider social assistance units and measuring their welfare.

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There are several reasons why programs might be focused on individuals rather than families or households. It is important to be clear about which reasons carry what degree of weight in a given setting to think through the eligibility mechanism that may match. For some reasons, categorical targeting matches well, and for other reasons, it may not.

Many programs with the individual as the social assistance unit are related to recognition of special merit or vulnerability. Social merit can comprise groups such as war veterans, families of war victims or atrocities, “hero” mothers, and occasionally even artists. Such programs are not uncommon, but usually they are fairly small and, if related only to merit, not a branch of social policy on which this book can shed much light. Programs for children and people living with disability often cite a strong basis in rights and documents, such as the Convention on the Rights of the Child (1989), the Convention on the Rights of Persons with Disabilities (2006), or the movement on the rights of the elderly.11 The vulnerabilities of these groups are well understood (box 3.1). The consensus around these rights is strong, as testified by the number of signatory nations. Since the rights established for these groups are congruent with the economic and social rights established for wider populations, the dilemmas about progressive realization are similar to those discussed in chapter 1.

Often programs that nominally focus on individuals as the social assistance unit are grounded in a perceived correlation between the individual category and need. For example, veterans may receive preferential access to training or livelihood programs to smooth their transition to civilian life. Children and the elderly may not be expected to generate income and indeed may to varying degrees require care that reduces the earnings of caregivers. Thus, children and the elderly, as individuals or households with more than an average share of nonearners, may be poorer on average. Disability is often listed among categorical benefits, but it is much more complicated and in some ways unlike other categories, at least in the difficulty of determining who belongs in the category (see box 5.5, in chapter 5).

If correlation with need is the main reason for programs focused on individuals, then it is very important to consider in detail, quantitatively and in each pertinent setting, how strong such correlations are. This leads to several methodological questions, especially relating to economies of scale and equivalence, which can be particularly important in welfare rankings of families of different demographic compositions. While the theory of why both are sensible constructs to use is intuitive and broadly shared, consensus on a practical calibration of them remains elusive (Deaton 2016; Deaton and Zaidi 2002; Newhouse, Suarez-Becerra, and Evans 2016; Ravallion 2015; World Bank 2018a).