Subbarao, KalanidhiChristiaensen, Luc J.2013-06-192013-06-192004-06https://hdl.handle.net/10986/14039Considerations 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.en-USCC BY 3.0 IGOACCOUNTINGAGRICULTUREARABLE LANDBORROWINGCLIMATIC CONDITIONSCUMULATIVE DISTRIBUTION FUNCTIONDEMOGRAPHICSDEPENDENT VARIABLEDESCRIPTIVE STATISTICSDEVELOPING COUNTRIESECONOMIC GROWTHEMPIRICAL APPLICATIONEMPIRICAL APPROACHESEMPIRICAL ESTIMATIONEMPIRICAL LITERATUREEMPIRICAL RESEARCHEXCHANGE RATEEXPECTED UTILITYEXPENDITURESHEALTH OUTCOMESHETEROSKEDASTICITYHISTORICAL DATAHOUSEHOLD INCOMEHOUSEHOLD MEMBERSHUMAN CAPITALINCOMEINCOME SHAREINCOME SHOCKSINCOME SOURCESINCREASING FUNCTIONINSURANCEINSURANCE MARKETSLABOR MARKETLABOR SUPPLYLAND OWNERSHIPLIQUIDITYMARKET INTEGRATIONMEAN CONSUMPTIONMEASUREMENT ERRORMORAL HAZARDOBSERVED CHANGESPOLICY INSTRUMENTSPOLICY MAKERSPOLICY PERSPECTIVEPOLICY RESEARCHPOVERTY GAPPOVERTY INDEXPOVERTY LINEPOVERTY MEASUREPOVERTY MEASURESPOVERTY OUTCOMESPRICE FLUCTUATIONSPRIVATE SECTORPRODUCT MARKETSPRODUCTION TECHNOLOGYPUBLIC SECTORRAINFALL VARIABILITYREGIONAL DEFLATORSREGRESSION ANALYSISRELATIVE IMPORTANCERESOURCE ALLOCATIONRISK AVERSIONRISK MANAGEMENTRISK PREFERENCESECONDARY SOURCESSMOOTHING CONSUMPTIONTERMS OF TRADETIME SERIESTRADE SHOCKSURBAN DWELLERSUTILITY FUNCTIONWEALTH RURAL AREASVULNERABILITY ANALYSISPOVERTYMETHODOLOGYHOUSEHOLDSMALARIA INCIDENCECATTLE FARMINGGOATSLITERACYCONSUMPTIONHOUSEHOLDSARID REGIONSWorld Bank10.1596/1813-9450-3326