Program Evaluation and Ethnic Differences: The Pension 65 Program in Peru

Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2018-21

48 Pages Posted: 27 Dec 2018

See all articles by Koen Decancq

Koen Decancq

University of Antwerp; KU Leuven - Center for Economic Studies; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE); University of Mannheim - Mannheim Centre for European Social Research (MZES)

Javier Olivera

LISER; KU Leuven, Department of Economics

Erik Schokkaert

Catholic University of Leuven (KUL)

Date Written: November 21, 2018

Abstract

We show that the introduction of a non-contributory pension program (Pension 65) in Peru had remarkably different effects for its three main ethnic groups, i.e., Mestizo, Quechua, and Aymara. The Aymara beneficiaries of the program have experienced larger increases in health and life satisfaction compared to other Peruvians. Using a panel life satisfaction regression, we find evidence for preference heterogeneity between the Aymara and the other ethnic groups that is consistent with the observed differences. Finally, we turn to the question of how the pension program can be evaluated in a robust manner while respecting the preference heterogeneity between the ethnic groups. We propose the natural criterion that a program benefits a recipient if she is lifted to a higher indifference curve. We show that the pension program was beneficial for all groups, but that more Aymara beneficiaries were lifted to a higher indifference curve compared to other Peruvians. Our proposed criterion can be useful to evaluate programs in all cases where preference differences matter.

Keywords: Program Evaluation, Ethnicity, Preferences, Pensions, Peru

JEL Classification: D12, I30, I38, O12.

Suggested Citation

Decancq, Koen and Olivera, Javier and Schokkaert, Erik, Program Evaluation and Ethnic Differences: The Pension 65 Program in Peru (November 21, 2018). Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2018-21, Available at SSRN: https://ssrn.com/abstract=3299380 or http://dx.doi.org/10.2139/ssrn.3299380

Koen Decancq (Contact Author)

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

University of Mannheim - Mannheim Centre for European Social Research (MZES) ( email )

D-68131 Mannheim
Germany

Javier Olivera

LISER ( email )

11 Porte des Sciences Campus Belval
Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

HOME PAGE: http://https://sites.google.com/site/javierolive/

KU Leuven, Department of Economics ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Erik Schokkaert

Catholic University of Leuven (KUL) ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

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