The increasing availability of social statistics in Latin America opens new possibilities in terms of accountability and incentive mechanisms for policy makers. This paper addresses these issues within the institutional context of Brazilian educational system. We build a theoretical model based on the theory of incentives to analyze the role of incentives at the sub-national level. The first result is to demonstrate that an education target system has the potential to improve the allocation of resources to education through conditional transfers to municipalities and schools.

From a methodological point of view, this paper makes two contributions to the literature. One contribution is the proposal of a new measure of pro-poor growth. This new measure provides the linkage between growth rates in mean income and in income inequality. In this context, growth is defined as propoor (or anti-poor) if there is a gain (or loss) in the growth rate due to a decrease (or increase) in inequality. The other contribution is a decomposition methodology that explores linkages between growth patterns and social policies.

As the relation between income and well-being, measured by subjective happiness, is not direct, new perspectives are needed. This paper contributes to the discussion by developing a Perceived Human Development Index (PHDI), using the components of the Human Development Index (HDI) – that is, income, health and education – in their subjective versions. The dimension of work conditions was also added to the analysis.