Toward an understanding of household vulnerability in rural Kenya

Luc Christiaensen and Kalanidhi Subbarao

No 3326, Policy Research Working Paper Series from The World Bank

Abstract: Considerations of risk and vulnerability are key to understanding the dynamics of poverty. This study conceives vulnerability as expected poverty and illustrates a methodology to empirically assess household vulnerability using pseudo panel data derived from repeated cross sections augmented with historical information on shocks. Application of the methodology to data from rural Kenya shows that in 1994 rural households faced on average a 40 percent chance of becoming poor in the future. Households in arid areas that experience large rainfall volatility appear more vulnerable than those in non-arid areas, where malaria emerges as a key risk factor. Idiosyncratic shocks also cause non-negligible consumption volatility. Possession of cattle and sheep/goats appears ineffective in protecting consumption against covariant shocks, though sheep/goat help reduce the effect of idiosyncratic shocks, especially in arid zones. Of the policy instruments simulated, interventions directed at reducing the incidence of malaria, promoting adult literacy, and improving market accessibility hold most promise to reduce vulnerability.

Keywords: Financial Intermediation; Environmental Economics&Policies; Economic Theory&Research; Health Economics&Finance; Housing&Human Habitats; Environmental Economics&Policies; Health Economics&Finance; Inequality; Financial Intermediation; Economic Theory&Research (search for similar items in EconPapers)
Date: 2004-06-01
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (35)

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Journal Article: Towards an Understanding of Household Vulnerability in Rural Kenya (2005)
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