Is The Wealth Index Better than The Proxy Means Test in Poverty Targeting? A Study in Brebes and East Jakarta

Abstract

The ranking of household welfare status in targeting recipients of social protection programs is important and needs attention. Appropriate welfare status ranking is one of the keys for making the various types of programs designed by the government right on target. The Proxy Means Test method is popular in Indonesia in the 2015 Integrated Database Updating. Based on another popular statistical approach to ranking welfare status, the Wealth Index method is also known. Global surveys, such as Demographic and Health Surveys, Multiple Indicator Cluster Surveys, and World Food Program Surveys, have always used the Wealth Index to rank household welfare. Using Susenas data from March 2017 to March 2022, this study found that the Proxy Means Test method is better than the Wealth Index method in both Brebes Regency and East Jakarta City. The value of the classification error rate in Brebes Regency and East Jakarta City using the Proxy Means Test method is 13.94 percent and 10.37 percent, respectively. In comparison, the Wealth Index method is 25.12 percent and 14.74 percent. This research emphasizes that the results of the ranking of household welfare status are not only influenced by the method used but also by the socioeconomic conditions and characteristics of households data in the areas targeted by the program.