Can self-selection of subsidized commodities be used as a mechanism to transfer income to the poor? Evidence from two self-targeting programs, one in South Africa and one in Tunisia, shows that although self-targeting can clearly improve the distribution of food subsidies to the poorest members of society, its power to alleviate poverty and reduce income disparities is limited by preference patterns, income inequality, and the size of the individual subsidies. Self-targeting through quality and product differentiation can be a useful means to reform existing universal subsidy schemes, but it should be considered a transitional tool while the capacity for implementing more precise mechanisms is developed. Self-targeting-subsidizing only those commodities the target group has indicated it prefers-has been put in place as a way to reform generalized food subsidies and limit participation in these programs to the intended beneficiaries. By choosing to subsidize commodities consumed primarily by the poor, governments have found that they can improve the targeting-and reduce the costs-of food transfers. Selftargeting is attractive because it sidesteps the difficulty of determining how much income people have. By targeting the behavior of the poor, which they reveal, policymakers can avoid having to screen individuals on the basis of their incomes, which they generally do not divulge. One of the first examples of self-targeting reported in the literature was an experiment in Bangladesh in which sorghum flour was used as an alternative to wheat in ration shops (Karim, Majid, and Levinson 1980). This successful pilot program proved to be better targeted to the poor population than wheat flour (which was itself self-targeted) because rice is the preferred grain in that country (Ahmed 1988). Self-targeting can be also be achieved by quality differentiation. Tunisia subsidizes foods in several product groups (cereals, cooking oil, sugar, milk) according to the consumption preferences of the rich and the poor for various items in each group (Lindert 1995b; Tuck and Lindert 1996). Both Morocco and Egypt have reduced the

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This paper focuses on measuring the extent to which publicly subsidized transfers in Latin America and the Caribbean redistribute income. The redistributive power of 56 transfers in eight countries is measured by their simulated impacts on poverty and inequality, and by their distributional characteristic. Our findings suggest that public transfers can be effective instruments to redistribute income to the poor. Yet frequently they have not managed to do so. The redistributive impacts from social insurance are limited-and even regressive in some countries. This is due to two design factors: a 'truncation' in coverage due to requirements of membership in formal labour markets which exclude the majority of the poor, and highly generous unit benefits for those in the upper quintiles. The more recent emergence of social assistance only partially offsets this historical truncation of public transfers in the region. Despite coverage and distributional patterns that favour the poor, small unit subsidies limit the redistributive, poverty and inequality impacts of even the most targeted social assistance programmes. We also find considerable variation among social assistance programmes, with many food based programmes and scholarships being regressive.

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