| Abstract: |
This paper uses household survey data collected in September-October 2009 on a
nationally representative sample of 2,000 households in Bangladesh to examine
the nature of shocks experienced by households over the preceding 12 months
and the type of coping mechanisms that were adopted. The analysis finds that
more than half the sample claimed to have faced a shock -- economic, health,
climatic, or asset related -- over the previous year. Surprisingly, the
non-poor face a larger share of these shocks compared with the poor. A closer
look at this result shows that the non-poor report a significantly larger
share of"asset-related"shocks, which is consistent with the fact that the poor
have fewer assets to lose. Health-related shocks dominate and households
appear to have coped with these shocks through savings and loans, help from
friends, and depletion of assets. The results show that households, when faced
with covariate shocks due to climatic reasons, are less able to cope. As would
be expected, the poor are less able to cope with shocks compared with the
non-poor; the poor are more likely to use coping mechanisms that could have
negative welfare implications in the longer term, including the depletion of
assets, reduction of essential consumption, and use of high-interest loans.
Econometric analysis suggests that geographical location, socio-economic
status, and access to microfinance all affect the ability to cope with shocks.
Policy implications include the importance of developing safety nets that take
into account the vulnerability to climate-related shocks and further
developing the links between micro-finance and safety net programs. |