| Abstract: |
This paper explores the extent of consumption smoothing between 1981 and 1985
in rural Burkina Faso. In particular, we examine the extent to which
livestock, grain storage and interhousehold transfers are used to smooth
consumption against income risk. The survey coincided with a period of severe
drought, so that the results provide direct evidence on the effectiveness of
these various insurance mechanisms when they are the most needed. We find
evidence of little consumption smoothing. In particular, there is almost no
risk sharing, and households rely almost exclusively on self-insurance in the
form of adjustments to grain stocks to smooth out consumption. The outcome,
however, is far from complete smoothing. Hence the main risk-coping
strategies, which are hypothesized in the literature (risk sharing and buffer
stock), were not effective during the survey period. |