Extending the household economy approach to support the design of cash transfer programmes in Zambia

Cash transfer programmes have been proposed as a means of providing benefits to targeted
individuals or households in poorer African countries. A large programme aimed at poverty relief would require information to establish targeting criteria, and to estimate the proportion and number of poor households/people in different locations. Based on a case study of four villages in Kazangula District, Zambia, this paper evaluates the effectiveness of a refined version of the Household Economy Approach (HEA) for use in cash transfer programmes, as compared with the Individual Household Model (IHM). 

The paper argues that the HEA+ model combines the practical advantages of HEA and at least some of the detail supplied by data from individual household surveys. It suggests that HEA+ can be used to obtain estimates of:

• the proportion of poor households/people in each livelihood zone
• the cost of bringing this population up to the standard of living threshold
• changes in poverty rates following changes in production, assistance and the price of
  traded goods
• information which may be useful to establish targeting criteria

Based on the case study, the paper finds that the HEA+ is a fairly good fit when compared with IHM data. There is also close correspondence between the actual household income estimate from the IHM survey and the HEA+ model. The authors conclude that this method deserves further testing and, if relevant, could lead to lower costs in poverty measurement.