Managing risks: what Russian households do to smooth consumption?
The increasing availability of rich (panel) data provides many opportunities to test theories on consumption smoothing behaviour. At the same time, the informational requirements in terms of data and modelling are high and very context specific, thus requiring a filtering of essential explanatory ingredients. In this paper we show how conceptual and exploratory empirical analysis can contribute to this filtering process. We develop a conceptual framework to analyze possible smoothing arrangements of households distinguishing between various smoothing mechanisms, institutional smoothing partners and required assets. Subsequently, we apply this framework to Russian survey data to explore how Russian households may smooth consumption. We select and analyze a broad set of indicators from household survey data to study what actions Russian households take and how these actions reflect the existence and prevalence of particular smoothing channels. The results can be used to formulate hypotheses on household smoothing behaviour and to delineate the features of a more rigorous analysis. The picture that emerges is one in which financial markets play a limited role as a smoothing channel in Russia, regardless of the smoothing mechanism used (saving, lending, insurance). Instead, households seem to use internal strategies, their family, social networks and the state to smooth consumption through capital accumulation, gift giving, the provision of loans and (pension) benefits. Furthermore, we find some evidence that old age pensions may be used for intergenerational risk-sharing within families while other findings point towards the use of household food production as an income smoothing strategy as opposed to a shock-response strategy.
|Date of creation:||Aug 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Mark C. Foley & William Pyle, 2005. "Household Savings in Russia during the Transition," Middlebury College Working Paper Series 0522, Middlebury College, Department of Economics.
- Harounan Kaziango, 2004.
"Motives for Household Private Transfers in Burkina Faso,"
895, Economic Growth Center, Yale University.
- Kazianga, H., 2006. "Motives for household private transfers in Burkina Faso," Journal of Development Economics, Elsevier, vol. 79(1), pages 73-117, February.
- Dercon, Stefan, 1998.
"Wealth, risk and activity choice: cattle in Western Tanzania,"
Journal of Development Economics,
Elsevier, vol. 55(1), pages 1-42, February.
- Stefan Dercon, 1996. "Wealth, risk and activity choices: cattle in Western Tanzania," CSAE Working Paper Series 1996-08, Centre for the Study of African Economies, University of Oxford.
- Morduch, J., 1995.
"Income Smoothing and Consumption Smoothing,"
512, Harvard - Institute for International Development.
- Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
- Dubois, Pierre & Jullien, Bruno & Magnac, Thierry, 2007.
"Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence,"
CEPR Discussion Papers
6060, C.E.P.R. Discussion Papers.
- Pierre Dubois & Bruno Jullien & Thierry Magnac, 2008. "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence," Econometrica, Econometric Society, vol. 76(4), pages 679-725, 07.
- Dubois, Pierre & Jullien, Bruno & Magnac, Thierry, 2005. "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence," IDEI Working Papers 351, Institut d'Économie Industrielle (IDEI), Toulouse, revised Dec 2007.
- Dubois, Pierre & Jullien, Bruno & Magnac, Thierry, 2008. "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence," CEPR Discussion Papers 6661, C.E.P.R. Discussion Papers.
- Pierre Dubois & Bruno Jullien & Thierry Magnac, 2008. "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence," CESifo Working Paper Series 2184, CESifo Group Munich.
- Dubois, P. & Jullien, B. & Magnac, T., 2006. "Formal and informal risk sharing in LDCs : theory and empirical evidence," Economics Working Paper Archive (Toulouse) 200608, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
- Dubois, Pierre & Jullien, Bruno & Magnac, Thierry, 2007. "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence," IZA Discussion Papers 2842, Institute for the Study of Labor (IZA).
- 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.
- Ligon, Ethan, 1998. "Risk Sharing and Information in Village Economics," Review of Economic Studies, Wiley Blackwell, vol. 65(4), pages 847-64, October.
- Frederic Zimmerman & MICHAEL R. CARTER, .
"Asset Smoothing, Consumption Smoothing and the Reproduction for Inequality under Risk and Subsistence Constraints,"
Wisconsin-Madison Agricultural and Applied Economics Staff Papers
402, Wisconsin-Madison Agricultural and Applied Economics Department.
- Zimmerman, Frederick J. & Carter, Michael R., 2003. "Asset smoothing, consumption smoothing and the reproduction of inequality under risk and subsistence constraints," Journal of Development Economics, Elsevier, vol. 71(2), pages 233-260, August.
- McKenzie, David J., 2003. "How do Households Cope with Aggregate Shocks? Evidence from the Mexican Peso Crisis," World Development, Elsevier, vol. 31(7), pages 1179-1199, July.
- Reuben Gronau, 2006. "Home Production and the Macro Economy-Some Lessons from Pollak and Wachter and from Transition Russia," NBER Working Papers 12287, National Bureau of Economic Research, Inc.
- Alessandra Guariglia & Byung-Yeon Kim, 2003. "Wage arrears uncertainty and precautionary saving in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 493-512, 09.
- Udry, Christopher, 1995. "Risk and Saving in Northern Nigeria," American Economic Review, American Economic Association, vol. 85(5), pages 1287-1300, December.
- Alessie, Rob & Lusardi, Annamaria, 1997. "Saving and income smoothing: Evidence from panel data," European Economic Review, Elsevier, vol. 41(7), pages 1251-1279, July.
- Eswaran, Mukesh & Kotwal, Ashok, 1989. "Credit as insurance in agrarian economies," Journal of Development Economics, Elsevier, vol. 31(1), pages 37-53, July.
- Lokshin, Michael M. & Yemtsov, Ruslan, 2001. "Household strategies for coping with poverty and social exclusion in post-crisis Russia," Policy Research Working Paper Series 2556, The World Bank.
- Kochar, Anjini, 2004. "Ill-health, savings and portfolio choices in developing economies," Journal of Development Economics, Elsevier, vol. 73(1), pages 257-285, February.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:4670. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.