Electronic Food Vouchers in Indonesia: A Study

Electronic Food Vouchers in Indonesia: A Study

• The Indonesian government replaced the in-kind food assistance program, Rastra, with the electronic voucher program, Non-Cash Food Aid, in 2017.
• The researchers used randomization in the program reform to analyze the effectiveness of both programs.
• The in-kind program involved distributing 10kg of free rice per month to 15 million households.
• The electronic voucher program used debit cards for buying rice and eggs at designated shops.
• The voucher program had a budget of $1.5 billion USD, similar to the in-kind program.
• The researchers analyzed household data from the SUSENAS National Survey and the government's Unified Targeting Database.
• The study used 105 districts with a population of 53 million and 3.4 million beneficiaries for the analysis.
• Key findings indicate voucher recipients received 85% more subsidy value compared to in-kind recipients.
• Poorer voucher households received 46% more benefits compared to in-kind, resulting in a 4.6 percentage point decrease in poverty for the poorest 15% of households.
• Although poorer voucher households were less likely to receive benefits than in-kind households, the higher benefit amount for those who did receive vouchers led to a significant reduction in poverty among the poorest households.
• The difference in benefit amounts between programs is attributed to the indivisible nature of vouchers compared to the divisible in-kind benefits.
• The study highlights the efficiency and effectiveness of the voucher program in reducing poverty and suggests that voucher programs can be a valuable tool for poverty reduction.

Measuring Inequality: A Framework

• The Lorenz Curve is used to visualize income inequality, plotting cumulative income share against cumulative population share.
• Perfect equality occurs when all individuals have the same income.
• The Gini Coefficient measures the area between the Lorenz Curve and the line of perfect equality, representing the degree of inequality in a society.
• The Gini Coefficient ranges from 0 (perfect equality) to 1 (complete inequality).
• The Kuznets’s Inverted-U hypothesis suggests that income inequality worsens during the early stages of economic growth and then improves in later stages.

Measuring Absolute Poverty: Focus on Income

• Income Poverty refers to people lacking sufficient resources to meet basic needs.
• The headcount, H, refers to the number of people below the poverty line.
• The Total Poverty Gap (TPG) measures the total income required to bring everyone below the poverty line up to it.
• The Average Poverty Gap (APG) calculates the average amount of income needed to reach the poverty line for individuals below it.
• The Normalized Poverty Gap (NPG) measures the total poverty gap relative to total income, providing a standardized measure of poverty.