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Perceived Vulnerability to Downside Risk

Author

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  • Felix Povel

    (Georg-August-University Göttingen)

Abstract

In this paper we propose an approach to vulnerability called perceived vulnerability to downside risk. We argue that the other concepts of vulnerability, though partially adhering to the focus axiom, do not exclusively consider downside risks in their measures. The reason for this is that most of them use a pre-determined threshold such as the poverty line as their benchmark for analysis. Instead, we opt for the current level of wellbeing of a household as reference point. Also, we propose to use subjective risk perception as the source of information for quantifying vulnerability since it overcomes some of the shortcomings connected to the reliance on information about the past. Finally, we apply the measure of perceived vulnerability to downside risk to risk perception data from Thailand and Vietnam and find that households in the latter country tend to be more vulnerable than households in the former. Moreover, determinants of perceived vulnerability to downside risk differ significantly between the two countries.

Suggested Citation

  • Felix Povel, 2010. "Perceived Vulnerability to Downside Risk," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 43, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:043
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    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_43.pdf
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    Cited by:

    1. Renuka Mahadevan & Vincent Hoang, 2016. "Is There a Link Between Poverty and Food Security?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(1), pages 179-199, August.

    More about this item

    Keywords

    Vulnerability; Risk; Risk Perception; Subjective Wellbeing;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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