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Risk and Vulnerability Experiments

Poverty analysis has moved beyond understanding the correlates of current poverty status of individuals, to identifying the dynamics of poverty and the role of risks and mechanisms for coping with economic shocks.  Understanding the exposure of households to risk and the strategies to manage risk are important for developing policies to assist households (see Vakis, Kruger and Mason, 2004), which in turn can impact growth (Dercon, 2004).  Through the development of social risk management (SRM), public interventions can be designed to assist individuals, households and communities to better manage the diverse risks to which they are exposed (Holzmann and Jorgensen, 2000).  This framework focuses on risk-induced poverty traps, situations where households adversely affected by risks become and/or stay poor because they do not have the assets or access to resources needed to counteract the effect of the risk.

In an effort to provide quantitative data to analyze these areas, in recent years, an increasing number of integrated household surveys have included special modules to collect information on shocks experienced by households and their coping strategies (for example, recent surveys in GuatemalaTanzania, and Malawi).  These modules usually collect self-reported information on shocks and the impact and coping strategies adopted ex post to address these shocks.  To date, however, there has been no systematic effort to evaluate these modules and compare the reliability of data they collect.

The research to be done will focus on:

  • The appropriate structure to collect valid data on shocks
  • Characterization of shocks by households
  • Assessment of ex ante risk management
  • Measures of perceptions of future risks

 




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