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On risk-based poverty traps

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  • Barrett, Christopher B.
  • Schofield, Heather

Abstract

Much development policy has followed from the idea of poverty traps, the belief that the poor (and poor countries) lack capital and the ability to borrow, thus cannot invest sufficiently to build a better future for themselves. Poverty is thus self-reinforcing. This essay explores a complementary, alternate hypothesis, that poverty traps may be driven not only by lack of access to capital, but also (or instead) by differential exposure to uninsured risk and ability to cope with that risk. We explain the hypothesis and its historical roots, discuss empirical evidence, and tease out prospective solutions to the possibility of risk-based poverty traps.

Suggested Citation

  • Barrett, Christopher B. & Schofield, Heather, 2026. "On risk-based poverty traps," World Development, Elsevier, vol. 201(C).
    • Handle: RePEc:eee:wdevel:v:201:y:2026:i:c:s0305750x26000069
    DOI: 10.1016/j.worlddev.2026.107317
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