IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Seasonality, precautionary savings and health uncertainty: Evidence from farm households in central Kenya

  • Ndirangu, Lydia
  • Burger, Kees
  • Moll, Henk AJ
  • Kuyvenhoven, Arie

The high prevalence of risks in low income economies makes managing uncertainty critical for productivity and survival. This paper analyzes seasonal changes in farm households’ per capita consumption and saving in response to weather and health shocks. Using a sample of 196 households in central Kenya, it tests the notion that people save most of their transitory income, and examines their precautionary saving motives. The results show that the propensity to save out of transitory income is about a fifth of what the permanent income hypothesis postulates. The propensity to save differs by wealth, with the poor exhibiting stronger precautionary motives towards rainfall variability. But the wealth effect is weak, suggesting that the asset base is vulnerable even for the better-off. However, precautionary savings tend to increase with wealth among HIV/AIDS affected households. Since illness is associated with higher consumption, and therefore less investment, we find more volatile consumption for HIV/AIDS affected households.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://purl.umn.edu/156670
Download Restriction: no

Article provided by African Association of Agricultural Economists in its journal African Journal of Agricultural and Resource Economics.

Volume (Year): 05 (2010)
Issue (Month): 2 (December)
Pages:

as
in new window

Handle: RePEc:ags:afjare:156670
Contact details of provider: Postal: c/o FORMAT, 5th Floor, Muthaiga Mini Market, Limuru Road, P.O. Box 79 - 00621 Village Market, Nairobi, Kenya
Phone: 254 20 6752866
Web page: http://www.aaae-africa.org/afjareEmail:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Marcel Fafchamps & Chris Udry & Katherine Czukas, . "Drought and Saving in West Africa: Are Livestock a Buffer Stock?," Working Papers 97013, Stanford University, Department of Economics.
  2. Rosenzweig, Mark R & Binswanger, Hans P, 1993. "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments," Economic Journal, Royal Economic Society, vol. 103(416), pages 56-78, January.
  3. Paxson, Christina H, 1993. "Consumption and Income Seasonality in Thailand," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 39-72, February.
  4. Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
  5. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-24, September.
  6. Ersado, Lire & Alderman, Harold & Alwang, Jeffrey, 2003. "Changes in Consumption and Saving Behavior before and after Economic Shocks: Evidence from Zimbabwe," Economic Development and Cultural Change, University of Chicago Press, vol. 52(1), pages 187-215, October.
  7. Udry, Christopher, 1995. "Risk and Saving in Northern Nigeria," American Economic Review, American Economic Association, vol. 85(5), pages 1287-1300, December.
  8. Udry, Christopher, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 495-526, July.
  9. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
  10. Kinsey, Bill & Burger, Kees & Gunning, Jan Willem, 1998. "Coping with drought in Zimbabwe: Survey evidence on responses of rural households to risk," World Development, Elsevier, vol. 26(1), pages 89-110, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ags:afjare:156670. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.