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Abstract: When the Mexican Congress approved the country's 2007 budget, it included an appropriation of 8.5 billion pesos allocated to provide non-contributive pensions to senior citizens. President Felipe Calderon wanted to introduce eligibility criteria that would ensure the new federally-funded pensions would go to poor seniors that would otherwise lack the means to sustain themselves. This case puts the reader in the shoes of Calderon's advisor, asking them to assess which targeting option would be best for the Mexican government, taking into account a wide range of criteria including targeting efficiency, financial feasibility, political viability, and administrative feasibility. The case provides a brief description of previous efforts to target the poor in Mexican social programs and data to evaluate three potential targeting options.
Learning Objective: Readers of this case will use real-world data to compute two commonly used targeting measures, leakage and undercoverage rates, to decide how best to target pensions for the elderly in Mexico. The case can be taught in probability and statistics courses, or in applied microeconomics courses, and a special appendix provided in the Teaching Note helps instructors to teach the case to policymakers without a statistical background who are interested in targeting and using evidence in social policy.