Social interactions, election goals and poverty reduction : evidence from an anti-poverty program in Sri Lanka
This thesis evaluates the targeting strategy and impact on household welfare of two of the largest components of the Samurdhi welfare program in Sri Lanka - the food stamp and microfinance programs. Combining national level household data with data on the voting patterns of the 1994 parliamentary elections, the thesis shows that households who are more likely to vote for the ruling party are also more likely to receive food stamps. This "political effect" also leads to a significant percentage of the benefits from Samurdhi being allocated to non-poor households, even though the allocations to districts are broadly pro-poor. In terms of the microfinance program, the thesis shows that households form credit groups on their own if they reside in villages that are religiously homogeneous, and therefore more likely to be socially cohesive. Loan officers can play an important role in forming credit groups in villages that are religiously diverse and among migrant households who live in government settlements, thereby increasing program coverage in these areas. The analysis in this thesis shows that both the individual and joint impact of the food stamp and microfinance interventions are significantly positive for the per capita food consumption of the "average" household. However, the increase in per capita total expenditure is only significant for participants of the microfinance program. The results also show that the Samurdhi microfinance program leads to a large and highly significant impact on food consumption for the poorest households, whereas the food stamp program has a positive impact on the total expenditure and not on food consumption. Both interventions have a larger and a more significant impact on the total expenditure of the poorest compared to better off households. The policy suggestions relate to improving the pro-poor targeting of Samurdhi food stamp and micro-finance interventions in order to maximize their poverty impact.