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Conflict and the nature of precautionary wealth

Author

Listed:
  • Aghabarari,Leila
  • Rostom,Ahmed Mohamed Tawfick
  • Sinha,Rishabh

Abstract

The paper uses a detailed household survey to document precautionary wealth accumulation in Afghanistan, with wealth being significantly higher for households facing higher income uncertainty. Annual household expenditure on nondurable goods is also lower for these households. There is no significant difference in the wealth response to income uncertainty across high- and low-conflict provinces. However, the constituents of precautionary wealth vary drastically. While households in the low-conflict regions rely almost exclusively on livestock to iron out uncertainty, households in the high-conflict areas also build up a reserve of gold and silver. This shift in household portfolio suggests a more substantial decline in real returns of livestock relative to jewelry in high-conflict provinces.

Suggested Citation

  • Aghabarari,Leila & Rostom,Ahmed Mohamed Tawfick & Sinha,Rishabh, 2018. "Conflict and the nature of precautionary wealth," Policy Research Working Paper Series 8453, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8453
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    Cited by:

    1. Blumenstock, Joshua & Callen, Mike & Ghani, Tarek & González, Roberto, 2024. "Violence and financial decisions: evidence from mobile money in Afghanistan," LSE Research Online Documents on Economics 117303, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Livestock and Animal Husbandry; Primary Metals; Mining&Extractive Industry (Non-Energy); Urban Housing and Land Settlements; Urban Housing; Urban Governance and Management; Municipal Management and Reform; ICT Economics;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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