Identification and Classification of Households for Targeting Subsidies in Iran: Using Proxy Means Test

Today, in all countries, the governments goal of supportive policies is to create an efficient system to protect society. So, choosing a good support system is discussed as a major concern. Especially for developing countries. The purpose of this study is to search about targeting methods, and to target subsidies by using proxy means test. By checking previous studies. We discover that, among assessment methods. Proxy means test is one of the best methods in such countries who dont have a good statistic system. In proxy means test, the set of explanatory variables that are closely associated with the consumption of households were used to estimate welfare. In this case, the variables, who are not significant enough to explain the net expenditure, were removed in stages, till discover the variables who can explain the net expenditure per capita for each household. After determining the optimal variables that explain most of the welfare state, a threshold for eligibility to receive benefits in the support programs, determined. So, poverty line is calculated with different methods and the following separation lines were determined. At the end by using excel software, inclusion and exclusion errors were estimated, and the model with six separation line were assessed. Abstract of paper goes here.