Publication: How Do the Poor Cope with Shocks in Bangladesh? Evidence from Survey Data
Date
2011-09-01
ISSN
Published
2011-09-01
Author(s)
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.
Citation
“Santos, Indhira; Sharif, Iffath; Rahman, Hossain Zillur; Zaman, Hassan. 2011. How Do the Poor Cope with Shocks in Bangladesh? Evidence from Survey Data. Policy Research working paper ; no. WPS 5810. © http://hdl.handle.net/10986/3573 License: CC BY 3.0 IGO.”
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