Paper
Developing and Testing Poverty Assessment Tools: Results From Accuracy Tests in Peru
How have poverty indicators performed in Peru?
This report presents the results of the accuracy tests of poverty indicators in Peru. It presents:
- An overview of the design of the field research for the accuracy test, and the computation of the applicable poverty line.
- Results on selected poverty indicators from nine regression models.
Further, the paper investigates poverty outreach of six microfinance institutions in Peru and finds that 20-22% of clients of publicly owned banks, rural savings and loan banks, as well as non-government organizations belong to very poor households.The paper concludes that:
- The nine regression models show satisfactory levels of overall accuracy, i.e. the percentage of household correctly predicted as being very poor or not very poor;
- All models estimated by Ordinary Least Squares (OLS) had lower accuracies among the very poor compared to the accuracies among the not very poor;
- Inaccuracies in prediction are not equally distributed over all expenditure percentiles but are systematically higher among the very poor compared to the not very poor.
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