Toward an Understanding of Household Vulnerability in Rural Kenya

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.

Bibliographic Details

Main Authors:	Subbarao, Kalanidhi, Christiaensen, Luc J.
Language:	English en_US
Published:	World Bank, Washington, D.C. 2004-06
Subjects:	ACCOUNTING, AGRICULTURE, ARABLE LAND, BORROWING, CLIMATIC CONDITIONS, CUMULATIVE DISTRIBUTION FUNCTION, DEMOGRAPHICS, DEPENDENT VARIABLE, DESCRIPTIVE STATISTICS, DEVELOPING COUNTRIES, ECONOMIC GROWTH, EMPIRICAL APPLICATION, EMPIRICAL APPROACHES, EMPIRICAL ESTIMATION, EMPIRICAL LITERATURE, EMPIRICAL RESEARCH, EXCHANGE RATE, EXPECTED UTILITY, EXPENDITURES, HEALTH OUTCOMES, HETEROSKEDASTICITY, HISTORICAL DATA, HOUSEHOLD INCOME, HOUSEHOLD MEMBERS, HUMAN CAPITAL, INCOME, INCOME SHARE, INCOME SHOCKS, INCOME SOURCES, INCREASING FUNCTION, INSURANCE, INSURANCE MARKETS, LABOR MARKET, LABOR SUPPLY, LAND OWNERSHIP, LIQUIDITY, MARKET INTEGRATION, MEAN CONSUMPTION, MEASUREMENT ERROR, MORAL HAZARD, OBSERVED CHANGES, POLICY INSTRUMENTS, POLICY MAKERS, POLICY PERSPECTIVE, POLICY RESEARCH, POVERTY GAP, POVERTY INDEX, POVERTY LINE, POVERTY MEASURE, POVERTY MEASURES, POVERTY OUTCOMES, PRICE FLUCTUATIONS, PRIVATE SECTOR, PRODUCT MARKETS, PRODUCTION TECHNOLOGY, PUBLIC SECTOR, RAINFALL VARIABILITY, REGIONAL DEFLATORS, REGRESSION ANALYSIS, RELATIVE IMPORTANCE, RESOURCE ALLOCATION, RISK AVERSION, RISK MANAGEMENT, RISK PREFERENCE, SECONDARY SOURCES, SMOOTHING CONSUMPTION, TERMS OF TRADE, TIME SERIES, TRADE SHOCKS, URBAN DWELLERS, UTILITY FUNCTION, WEALTH RURAL AREAS, VULNERABILITY ANALYSIS, POVERTY, METHODOLOGY, HOUSEHOLDS, MALARIA INCIDENCE, CATTLE FARMING, GOATS, LITERACY, CONSUMPTION, ARID REGIONS,
Online Access:	http://documents.worldbank.org/curated/en/2004/06/4966376/toward-understanding-household-vulnerability-rural-kenya https://hdl.handle.net/10986/14039
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