Hidden Impact? Ex-Post Evaluation of an Anti-Poverty Program

By the widely used difference-in-difference method, the Southwest China Poverty Reduction Project had little impact on the proportion of people in beneficiary villages consuming less than $1 a day - despite a public outlay of $400 million. Is that right, or is the true impact being hidden somehow? Chen and Ravallion find that impact estimates are quite sensitive to the choice of outcome indicator, the poverty line, and the matching method. There are larger poverty impacts at lower poverty lines. And there are much larger impacts on incomes than consumptions. Uncertainty about the impact probably made it hard for participants to infer the gain in permanent income, so they saved a high proportion of the short-term gain. This paper - a product of the Poverty Team, Development Research Group - is part of a larger effort in the group to assess the impact on poverty of World Bank lending. The study was funded by the Bank's Research Support Budget under the research project Looking Beyond Averages: A Research Program on Poverty and Inequality (RPO 681-39)