Does a portfolio of consumption adjustment coping strategies erode resilience? Panel data evidence from Ethiopia

For smallholder subsistence farmers, it is difficult to undertake adequate ex-ante strategies to prepare for shocks. These households are forced to attempt multiple ex-post coping strategies such as consuming less preferred food, limiting food diversity and reducing the size of meals. The literature on consumption has generally overlooked the potential impact of post-shock consumption adjustment on nutritional deprivation. This paper uses panel data sets in rural communities of Ethiopia to provide empirical evidence on households’ decisions on portfolios of ex-post consumption adjustment and their impact on dietary intake, using an endogenous switching treatment effects approach. Our results show that the choices of coping strategies differ with the level of asset ownership and extent of shocks. However, the non-linear relationship between assets and coping strategies reveals the co-existence of consumption smoothing and consumption adjustment coping actions. The empirical results show that the choice of any of the coping strategies, whether individually or jointly, results in greater undernourishment, which suggests that ex-post coping actions may erode resilience by causing nutritional deprivation. The findings suggest closing the adaptation deficit to increase resilience to shocks.