Indicator 1.b.1 Pro-poor public social spending

Indicator 1.b.1: Pro-poor public social spending

Target 1.b: Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions

UNICEF, Save the Children

Definition:

Proportion of government spending towards which benefit directly the monetary poor in health, education and direct transfers. Government spending measures public expenditures on health and education services. Direct transfers refer to cash transfers and near-cash transfers. The definition of the monetary poor follows national standards, with poverty levels determined by national definition of income or consumption poverty (consistent with SDG 1.2.1).

Concepts:

Proportion of public spending: Expenditures by governments on health, education and direct transfers (cash transfers and near-cash transfers).

The poor: Monetary Poverty as determined by national definition of income/consumption poverty (consistent with SDG 1.2.1).

This indicator requires fiscal or budgetary or administrative data on social expenditures and subsidy expenditure as well as a nationally representative micro-data set (for instance income/expenditure survey or household budget survey).

Ultimately the data providers are national-level statistical agencies for the micro-data sets and national-level fiscal agencies and bodies for the budgetary and administrative data.

Feasibility: The indicator can be estimated for any country for which (a) a micro-data set detailing incomes or expenditures and services utilization (i.e. education, health, and cash transfers receipts) at the individual or household level exists and (b) a set of fiscal, administrative, or budgetary records detailing public expenditures at the program level is available.

Suitability/relevance: The indicator provides an estimate how well public resources are allocated to sectors which disproportionally benefit the poor. This reflects the financial consequences of policy frameworks, which are based on pro-poor development strategies, which allows to measure progress on the SDG target 1.b.

Relationship with other SDGs: The indicator could be compared with the one under SDG 10 on equity of fiscal policy. Countries should be encouraged to collect and analyse the data within a single process to create synergy and avoid unnecessary duplication.

Limitations: The indicator does not take into effect the consequences of revenue-related fiscal activities, such as taxes or contributions to public insurance systems, on the poor. The proposed methodology does not currently expand to other groups, such as women or children.

Monetary Poverty can be derived directly from a nationally representative micro-data set (an Income and Expenditure Survey, for example). Procedures for estimations are detailed comprehensively in the 1.2.1 metadata. The estimates used for this indicator would be the same as the ones for Target 1.2.1.

Public spending on social services can be directly derived from budget administrative data.

A fiscal incidence analysis is required to estimate the benefit the poor individuals or households (depending on underlying survey data) are receiving from those services. The incidence analysis measures the monetised value of in-kind transfers in education and health services at average government costs. In addition, this indicator includes cash and near cash transfers in the definition of social services (conditional and unconditional cash transfers, school feeding programmes etc.). The procedures are described in detailed in the CEQ Handbook, Meerman, Jacob (1979), Selowsky, Marcelo (1979), and many other ones.

2021-12-20

UNICEF, Save the Children

The definition of poverty follows indicator 1.2.1 (Proportion of population living below the national poverty line, by sex and age).

The methodology underlying the proposed indicator 1.b.1 and its data requirements are also closely related to that of the newly accepted indicator Redistributive Impact of Fiscal Policy measuring SDG target 10.4. However, the two indicators measures different aspects of public policies: while the Redistributive Impact of Fiscal Policy indicator is an exact measure of the distributional impact of fiscal policies aimed at achieving greater equality (SDG target 10.4), this indicator focuses solely on the spending side of governments’ fiscal policies and its effect on the poor. Fiscal policies that are found to reduce overall inequality may not benefit disproportionately more the poor, as their impact on the income distribution may occur in higher deciles of the distribution. In clear contrast to the indicator Redistributive Impact of Fiscal Policy, the clear focus of the proposed indicator Pro-poor public social spending is on the effect of spending for poor individuals or households, reflecting if social policies are designed with pro-poor development strategies in mind, and therefore directly measuring SDG target 1.b.

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