Economics at your fingertips  

Income Volatility, Risk-Coping Behavior and Consumption Smoothing Mechanisms in Developing Countries: A Survey

Javier Baez ()

Revista Desarrollo y Sociedad, 2006

Abstract: This paper provides a review of the general concepts and infl uential fi ndings of empirical research on risk-coping behavior and consumption smoothing arrangements in rural economies of developing countries. Low-income individuals live with high levels of risk and limited access to formal fi nancial systems for credit and insurance. In general, the evidence indicates that their informal mechanisms to mitigate risk play an important role in partially protecting their consumption. However, these alternatives do not allow rural households to achieve an optimal allocation of risk across time and income cycles and are costly on equity grounds. In addition, risks that remain uninsured seem to have adverse long term welfare consequences. Public interventions can play a signifi cant role in improving the income security of rural households. In doing so, it is crucial to have a good understanding of the causes and not simply the symptoms of informal risk-coping behavior and its social welfare implications.

Keywords: Risk coping behavior; consumption smoothing arrangements; income volatility; informal insurance; developing countries (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Revista Desarrollo y Sociedad from Universidad de los Andes - CEDE
Bibliographic data for series maintained by Universidad De Los Andes-Cede ().

Page updated 2021-08-19
Handle: RePEc:col:000090:002834