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Toward an understanding of household vulnerability in rural Kenya

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Author Info
Christiaensen, Luc. J.
Subbarao, Kalanidhi
Abstract

Considerations of risk and vulnerability are key to understanding the dynamics of poverty. This study conceives vulnerability as expected poverty and illustrates a methodology to empirically assess household vulnerability using pseudo panel data derived from repeated cross sections augmented with historical information on shocks. Application of the methodology to data from rural Kenya shows that in 1994 rural households faced on average a 40 percent chance of becoming poor in the future. Households in arid areas that experience large rainfall volatility appear more vulnerable than those in non-arid areas, where malaria emerges as a key risk factor. Idiosyncratic shocks also cause non-negligible consumption volatility. Possession of cattle and sheep/goats appears ineffective in protecting consumption against covariant shocks, though sheep/goat help reduce the effect of idiosyncratic shocks, especially in arid zones. Of the policy instruments simulated, interventions directed at reducing the incidence of malaria, promoting adult literacy, and improving market accessibility hold most promise to reduce vulnerability.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3326.

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Date of creation: 01 Jun 2004
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Handle: RePEc:wbk:wbrwps:3326

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Keywords: Financial Intermediation; Environmental Economics&Policies; Economic Theory&Research; Health Economics&Finance; Housing&Human Habitats; Environmental Economics&Policies; Health Economics&Finance; Inequality; Financial Intermediation; Economic Theory&Research;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Fafchamps, Marcel & Udry, Christopher & Czukas, Katherine, 1998. "Drought and saving in West Africa: are livestock a buffer stock?," Journal of Development Economics, Elsevier, vol. 55(2), pages 273-305, April. [Downloadable!] (restricted)
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  2. Morduch, Jonathan, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-14, Summer. [Downloadable!] (restricted)
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  3. C. Barrett & K. Smith & P. Box, 2001. "Not Necessarily In The Same Boat: Heterogeneous Risk Assessment Among East African Pastoralists," The Journal of Development Studies, Taylor and Francis Journals, vol. 37(5), pages 1-30, January. [Downloadable!] (restricted)
  4. Grimard, Franque, 1997. "Household consumption smoothing through ethnic ties: evidence from Cote d'Ivoire," Journal of Development Economics, Elsevier, vol. 53(2), pages 391-422, August. [Downloadable!] (restricted)
  5. Haddad, Lawrence & Hoddinott, John & Alderman, Harold & DEC, 1994. "Intrahousehold resource allocation : an overview," Policy Research Working Paper Series 1255, The World Bank. [Downloadable!]
  6. Kochar, Anjini, 1995. "Explaining Household Vulnerability to Idiosyncratic Income Shocks," American Economic Review, American Economic Association, vol. 85(2), pages 159-64, May. [Downloadable!] (restricted)
  7. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126. [Downloadable!] (restricted)
  8. Udry, Christopher, 1995. "Risk and Saving in Northern Nigeria," American Economic Review, American Economic Association, vol. 85(5), pages 1287-1300, December. [Downloadable!] (restricted)
  9. Ligon, Ethan & Schechter, Laura, 2002. "Measuring Vulnerability: The Director's Cut," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  10. Gamanou, Gisele & Morduch, Jonathan, 2002. "Measuring Vulnerability to Poverty," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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  12. Dercon, Stefan, 2004. "Growth and shocks: evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 74(2), pages 309-329, August. [Downloadable!] (restricted)
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  13. Barrett, Chris & Chabari, Francis & Bailey, Deevon & Coppock, Layne & Little, Peter, 2001. "Livestock Pricing In The Northern Kenyan Rangelands," 2001 Annual meeting, August 5-8, Chicago, IL 20460, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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  14. Ligon, Ethan & Laura Schechter, 2002. "Measuring Vulnerability," Royal Economic Society Annual Conference 2002 128, Royal Economic Society.
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  15. Glewwe, Paul & Hall, Gillette, 1998. "Are some groups more vulnerable to macroeconomic shocks than others? Hypothesis tests based on panel data from Peru," Journal of Development Economics, Elsevier, vol. 56(1), pages 181-206, June. [Downloadable!] (restricted)
  16. Jacoby, Hanan G & Skoufias, Emmanuel, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Blackwell Publishing, vol. 64(3), pages 311-35, July. [Downloadable!] (restricted)
  17. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-91, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Cesar Calvo & Stefan Dercon, 2005. "Measuring Individual Vulnerability," Economics Series Working Papers 229, University of Oxford, Department of Economics. [Downloadable!]
  2. Stefan Dercon (QEH), . "Vulnerability: a micro perspective," QEH Working Papers qehwps149, Queen Elizabeth House, University of Oxford. [Downloadable!]
  3. Jean-Yves Duclos & Abdelkrim Araar & John Giles, 2006. "Chronic and Transient Poverty: Measurement and Estimation, with Evidence from China," IZA Discussion Papers 2078, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Stefan Dercon (QEH), . "Risk, Growth and Poverty: what do we know, what do we need to know?," QEH Working Papers qehwps148, Queen Elizabeth House, University of Oxford. [Downloadable!]
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