Identity Verification Standards in Welfare Programs: Experimental Evidence from India
How should citizens prove their identity in order to access publicly provided goods and services? The core design challenge is managing the trade off between Type II errors of inclusion (including corruption) against Type I errors of exclusion whereby legitimate beneficiaries are denied benefits.
We use a large-scale experiment randomized across 15 million beneficiaries to evaluate the effects of more stringent ID requirements based on biometric authentication on the delivery of India’s largest social protection program (subsidized food) in the state of Jharkhand. Per se, requiring biometric identification to transact did not reduce leakage, slightly increased transaction costs for the average beneficiary, and reduced benefits received by 10% for the 23% of beneficiaries who had not previously linked an ID to the program database. Subsequent reforms that made use of authenticated transaction data to determine allocations to the program coincided with large reductions in leakage, but also significant reductions in benefits received.
Our results highlight that attempts to reduce corruption in welfare programs can also generate non-trivial costs in terms of exclusion and inconvenience to genuine beneficiaries.
Paul Niehaus is associate professor of economics at the University of California, San Diego, where he works with governments in emerging markets to improve the implementation of social programs. He is a faculty research fellow at the National Bureau of Economic Research (NBER), a junior affiliate at the Bureau for Research and Economic Analysis of Development (BREAD), an affiliate of the Jameel Poverty Action Lab (J-PAL), and an affiliate at the Center for Effective Global Action (CEGA). He is also cofounder of GiveDirectly, currently one of the top-rated nonprofits by GiveWell and ranked among the 25 most audacious companies (Inc) and 10 most innovative companies in finance (Fast Company), and cofounder of Segovia Technology Co. He holds a Ph.D. in economics from Harvard University. In 2013 Foreign Policy named him one of its 100 leading “Global Thinkers.”