Proxy Means Tests to Identify the Income Poor: Application for the Case of Vietnam

Poverty targeting plays an important role in ensuring the success of support programs for the poor. We assess the governmental poverty targeting in Vietnam, which identifies poor households by collecting income data using a simple two-page questionnaire. We propose a proxy means tests (PMT) method to predict income and poverty status of households using data on basic household characteristics. Compared with the poverty targeting using the simple income questionnaire, the PMT method has higher coverage and lower leakage rates. In addition, the proposed approach also allows for more transparent and comparable poverty estimation across small areas in Vietnam