Food Aid and Informal Insurance

Stefan Dercon () and Pramila Krishnan

Development and Comp Systems from EconWPA

Abstract: Households in developing countries use a variety of informal mechanisms to cope with risk, including mutual support and risk-sharing. These mechanisms cannot avoid that they remain vulnerable to shocks. Public programs in the form of food aid distribution and food-for-work programs are meant to protect vulnerable households from consumption and nutrition downturns by providing a safety net. In this paper we look into the extent to which food aid helps to smooth consumption by reducing the impact of negative shocks, taking into account informal risk-sharing arrangements. Using panel data from Ethiopia, we find that despite relatively poor targeting of the food aid, the programs contribute to better consumption outcomes, largely via intra-village risk sharing.

Keywords: risk-sharing; informal insurance; safety nets; food aid (search for similar items in EconPapers)
JEL-codes: D91 I38 O17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-edu and nep-ias
Date: 2004-09-22
Note: Type of Document - pdf; pages: 29
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