Authors: Tuck, Laura; Lindert, Kathy
Publication date: December 1996
Scarred by the violent responses to earlier cuts in its extensive food subsidy program, the Tunisian Government developed self-targeting subsidies, both politically acceptable and protective of the purchasing power and nutritional status of the poor, to reduce the budgetary costs of these transfers. Two mutually reinforcing approaches to self-targeting (where the poor identify themselves) are currently being implemented. The first tactic, a variant of the inferior goods approach, involves shifting subsidies to narrowly-defined items within a product line that are perceived by consumers to be of lower quality because they possess certain unattractive features in their packaging or ingredients. Although the intrinsic values of these products are preserved, these perceived inferior characteristics discourage consumption by wealthier households. The second method, the superior goods approach involves easing government controls to allow the private sector to market higher-quality, unsubsidized products that appeal to wealthier consumers, who then consume less of the subsidized varieties.
Publisher: World Bank