Benefit Incidence Analysis
Prepared for the GDN-R4D Strengthening Institutions Project 18 May 2009
Description of Benefit Incidence Analysis The second analytical component of the Strengthening Institutions project is a benefit incidence analysis of the education, health, and water sectors. The purpose of this activity is to gain a better understanding of whether government funds in the social sectors are equitably distributed across different income/expenditure groups or if spending is in reality targeted to either worse-off or better-off individuals. To conduct benefit incidence studies, partners will need to (1) estimate the average government subsidy for service utilization in each sector and facility level, (2) use household data to identify individuals who are service users, and (3) aggregate the service users over expenditure quintiles. Although benefit incidence can be a useful and informative exercise, it is also important to recognize the limitations of this type of analysis. Average benefit incidence (which partners will be conducting) makes major assumptions concerning the allocation of spending, including that the government subsidy for one unit of a social sector service is the same for all individuals, regardless of income/expenditure level and geographic location within the population area. It is important for partners to not only recognize these limitations but also take them into consideration when interpreting the results of this analysis. Benefit incidence analysis has been adapted by many researchers to overcome some of these changes while still providing important information about equity in spending programs. While these methods are outside of the scope of this project, they will be discussed briefly during the Benefit Incidence Technical Support session on Wednesday morning.
Project Requirements For the purpose of the Strengthening Institutions project, partners will be required to complete tables that provide information on service utilization, unit costs, and benefit incidence. Using consistent tables that will be filled out by all partners will provide a basis for country social sector spending benchmarks that partners can utilize in the next five years and beyond. The required tables are attached in the Annex. Partners will have an opportunity to discuss these tables during the May conference (after working with them during break-out group sessions), and the partners and project management team together will be able to discuss whether these tables are adequate for a base analysis and benchmarking or if more or fewer tables should be required.
Annex. Tables for Benefit Incidence Analysis Government Subsidy (per user) for Education, Health, and Water Services (1) Estimated Utilization of Services for Education, Health, and Water (2) Distribution of Education, Health, and Water Benefits by Expenditure Quintile (3)
Per-student Government Subsidy for School Enrollment, by Facility Level (1E) Education Primary
Unit Subsidy
Secondary Tertiary/University
Per-user Government Subsidy for Health Services, by Facility Level (1H) Health Hospital
Unit Subsidy
Health Center/Dispensary Preventative
Per-connection Government Subsidy for Water Services, by Connection Type (1W) 1 Water Private Connection
Unit Subsidy
Public Connection
1
Depending on the budget data available for the water sector, it may not be possible in some countries to estimate these costs. We ask that each partner try to utilize water data to estimate this, but please contact the project management team if this is not possible.
Estimated School Enrollment Level by Expenditure Quintile and Facility Level (2E) 2 Education 1 (lowest)
2
Expenditure Quintile 3 4
5 (highest)
Primary Secondary Tertiary/University TOTAL
Estimated Health Facility Usage by Expenditure Quintile and Facility Level (2H) Health 1 (lowest)
Expenditure Quintile 2 3 4
5 (highest)
Hospital Health Center/Dispensary Preventative 3 TOTAL
Estimated Water Usage by Expenditure Quintile and Connection Type (2W) Water 1 (lowest)
Expenditure Quintile 2 3 4
5 (highest)
Private Connection Public Connection TOTAL
2
Estimated school enrollment is equal to Xj * (POP/SAMPLE), where Xj is the number of people in quintile j who are enrolled in school in the survey sample, POP is the population size, and SMAPLE is the size of the survey sample. 3 This information may not be available, depending on the household survey data available to you.
Distribution of Benefits of Education Expenditures (%), by Expenditure Quintile and Facility (3E) Education 1 (lowest)
2
Expenditure Quintile 3 4
5 (highest)
Primary Secondary Tertiary/University TOTAL
Distribution of Benefits of Health Expenditures (%), by Expenditure Quintile and Facility (3H) Health 1 (lowest)
Expenditure Quintile 2 3 4
5 (highest)
Hospitals Health Centers/Dispensaries Preventative TOTAL
Distribution of Benefits of Water Expenditures (%), by Expenditure Quintile and Connection (3W) Water 1 (lowest) Private Connection Public Connection TOTAL
Expenditure Quintile 2 3 4
5 (highest)