Paraguay's Tekoporã programme for cash transfers: Debating targeting methods for beneficiaries

This article analyses alternative targeting methods for Paraguay's conditional cash transfer programme, Tekoporã. The major practical choice is currently between a multidimensional quality-of-life index, which has been used since the programme started, and a proxy means test. This note evaluates the relative performance of these two alternatives. The simulations conducted herein suggest that changing the targeting mechanism from the quality-of-life index to proxy means does not offer any gains in either the efficiency or the efficacy of the programme. If the intention of policymakers is to improve efficacy in reaching the poor, then maintaining the current targeting mechanism with a higher cut-off point is the best option. If the intention is to alleviate extreme poverty, the most efficient impact is also given by the quality-of-life index, but with a lower cut-off point. However, a higher threshold may provide a considerable gain in coverage without a substantial increase in leakage.