Comparison of Screening Devices

Abstract

Public agencies are often tasked with allocating scarce resources (such as public housing or financial aid) to a target population. In many such cases, the goal is to maximize social welfare, which requires identifying agents who have the highest social value for the resource. The challenge is that while public agencies may be able to access some data about potential beneficiaries (for example, through means testing), they generally lack information necessary to achieve perfect targeting. When monetary transfers are unavailable or ineffective in targeting, public agencies often rely on "ordeals" instead. Natural examples include standing in line, filing out complicated forms, dealing with "red tape," waiting, visiting an office at an inconvenient time, or traveling to a registration site. But what makes one costly screening device better than another?