On Measuring Vulnerability to Poverty

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Quantifying Vulnerability to Poverty in a Developing Economy

The concept of vulnerability extends the idea of poverty to include idiosyncratic as well as aggregate risks which can be defined as the probability of being in poverty or to fall deeper into poverty in the future. It can be categorised on the micro-and macro level where macro vulnerability refers to worldwide threats to social welfare, e.g. globalisation and recent international financial crises. Conversely, micro vulnerability refers to the household level risks including health risks, economic shocks, social shocks, natural disasters, and demographic shocks [Tesliuc and Lindert (2004)]. To assess and estimate vulnerability to poverty, various approaches had been proposed. First, vulnerability can be seen as a probability of falling into poverty in near future [Chaudhuri (2003); Christaensen and Subbarao (2005)]. The other ways of measuring vulnerability consider it as low expected utility [Ligon and Schechter (2003)] and vulnerability as uninsured expose to risk, i.e., measures of cost, in terms of consumption [Tesliuc and Lindert (2004)]. The basic idea is that the state of poverty at a given point actually is not sufficient for assessing poverty and for drawing results to design poverty reduction programs. Households face various risks and do not know whether any possible shock will hit them in future. So the assessment of poverty at a given point in time is a static approach, not considering possible changes in the future. By assessing vulnerability it refers to the dynamic perspective, it is explicitly forward looking and tries to include the risks that may push people into poverty in futur

Chronic Poverty and All That: The Measurement of Poverty over Time

We explore how to measure poverty over time, by focusing on trajectories of poverty rather than poverty at a particular point in time. We consider welfare outcomes over a period in time, consisting of a number of spells. We offer a characterization of desirable properties for measuring poverty across these spells, as well as an explicit discussion of three issues. First, should there be scope for compensation so that a poor spell can be compensated for by a non-poor spell? Second, is there scope for discounting or should all spells be equally valued? Third, does the actual sequence of poor spells matter, for example whether they are consecutive or not? We offer a number of measures that implicitly offer different answers to these questions, in a world of certainty. Finally, we also offer an extension towards a forward-looking measure of vulnerability, defined as the threat of poverty over time, that incorporates risk. An application to data from Ethiopia shows that especially the assumption of compensation results in different inference on poverty.poverty, chronic poverty, poverty dynamics, Ethiopia

Vulnerability : a view from different disciplines

Practitioners from different disciplines use different meanings and concepts of vulnerability, which, in turn, have led to diverse methods of measuring it. This paper presents a selective review of the literature from several disciplines to examine how they define and measure vulnerability. The disciplines include economics, sociology/anthropology, disaster management, environmental science, and health/nutrition. Differences between the disciplines can be explained by their tendency to focus on different components of risk, household responses to risk and welfare outcomes. In general, they focus either on the risks (at one extreme) or the underlying conditions (or outcomes) at the other. Trade-offs exist between simple measurement schemes and rich conceptual understanding.Environmental Economics&Policies,Health Economics&Finance,Insurance&Risk Mitigation,Economic Theory&Research,Rural Poverty Reduction

Theoretical underpinnings and empirical evidence for a new approach to vulnerability to poverty

The present research analyzes the debate on the link between risk and future welfare presenting the theoretical underpinning of a new sound empirical framework for measuring vulnerability to poverty. It demonstrates that uninsured risk reduces household's well-being for the more exposed subsets of the population through its impact on the "ex-ante" household's behavior. Challenging the common view that looks at the coping and managing strategies as an optimal "ex-ante" behavior to reduce the potentially harmful consequences of risk, this work demonstrates (theoretically and empirically) that the risk-induced changing behavior actually has a cost in terms of welfare, especially for poor households in developing contexts. If it is the case, current monetary approaches to vulnerability to poverty lead to bias poverty prevention recommendation

Measuring poverty using both income and wealth: A cross-country comparison between the U.S. and Spain

In this paper we study the correspondence between a household’s current income and its vulnerability to income shocks in two developed countries: the U.S. and Spain. Vulnerability is measured by the availability of wealth type resources to smooth consumption in a multidimensional approach to measuring poverty, which allows us to identify three groups of households. First, the twice-poor group which includes income-poor households who also lack of an adequate stock of wealth; second, the group of protected-poor households, which are all those income-poor families that have accumulated a buffer stock of wealth resources they can rely on; lastly, the vulnerable-non-poor group, which includes those households above the income-poverty line that do not hold any stock of wealth. The latter are, out of the group of non-poor, those who are more likely to be pushed into economic deprivation in times of economic hardship. Interestingly, the risk of belonging to one of these groups changes over the life-cycle in both countries while the size of the groups differs significantly between Spain and the U.S., although this result is quite sensible to whether one includes the housing wealth component in the wealth measure or not.Multidimensional poverty, income and wealth.

Climate Science, Development Practice, and Policy Interactions in Dryland Agroecological Systems

The literature on drought, livelihoods, and poverty suggests that dryland residents are especially vulnerable to climate change. However, assessing this vulnerability and sharing lessons between dryland communities on how to reduce vulnerability has proven difficult because of multiple definitions of vulnerability, complexities in quantification, and the temporal and spatial variability inherent in dryland agroecological systems. In this closing editorial, we review how we have addressed these challenges through a series of structured, multiscale, and interdisciplinary vulnerability assessment case studies from drylands in West Africa, southern Africa, Mediterranean Europe, Asia, and Latin America. These case studies adopt a common vulnerability framework but employ different approaches to measuring and assessing vulnerability. By comparing methods and results across these cases, we draw out the following key lessons: (1) Our studies show the utility of using consistent conceptual frameworks for vulnerability assessments even when quite different methodological approaches are taken; (2) Utilizing narratives and scenarios to capture the dynamics of dryland agroecological systems shows that vulnerability to climate change may depend more on access to financial, political, and institutional assets than to exposure to environmental change; (3) Our analysis shows that although the results of quantitative models seem authoritative, they may be treated too literally as predictions of the future by policy makers looking for evidence to support different strategies. In conclusion, we acknowledge there is a healthy tension between bottom-up/ qualitative/place-based approaches and top-down/quantitative/generalizable approaches, and we encourage researchers from different disciplines with different disciplinary languages, to talk, collaborate, and engage effectively with each other and with stakeholders at all levels

A systematic review of local vulnerability to climate change: in search of transparency, coherence and comparability

Because vulnerability is a conceptual construct rather than a directly observable phenomenon, most vulnerability assessments measure a set of “vulnerability indicators”. In order to identify the core approaches and range of variation in the field, we conducted a systematic literature review on local vulnerability to climate change. The systematic review entailed an identification of frameworks, concepts, and operationalizations and a transparency assessment of their reporting. Three fully defined relevant frameworks of vulnerability were identified: IPCC, Patterns of Smallholder Vulnerability and Vulnerability as Expected Poverty. Comparative analysis found substantial heterogeneity in frameworks, concepts and operationalizations, making it impossible to identify patterns of climate vulnerability indicators and determinants that have robust empirical support. If research measuring farmers’ vulnerability to climate change is to have any comparability, it needs greater conceptual coherence and empirical validity. We recommend a systematic program of testing and validating vulnerability measures before institutionalizing them in programmatic contexts

Collective action and property rights for poverty reduction: A review of methods and approaches

"While much attention has been given to examining various aspects of poverty, a number of studies have shown that institutional environment in which the poor exist conditions welfare outcomes, thus highlighting the inherently crucial importance of institutions for poverty reduction. The institutions of property rights and collective action are among those identified as playing a major role in the livelihood strategies of the poor. This paper highlights ways to operationalize the conceptual framework developed by Di Gregorio and colleagues (2008), which provides an analytical tool to study poverty through the institutional lens with a special focus on collective action and property rights. By emphasizing the multidimensionality of poverty, the authors advocate the importance of applying various approaches and tools to conceptualizing and measuring it. They also emphasize the crucial role that institutions of collective action and property rights play in poverty reduction and sketch out theoretical nuances and methods of examining such institutions. In addition, power relations and political context are seen to be of outmost importance in poverty-related studies; the authors provide suggestions on how to understand and operationalize various dimensions of power and institutional environment in research. Outcomes are approached from the evaluative standpoint, which moves beyond straightforward empirical measurement of certain indicators to a comprehensive analysis that would involve a range of methods and approaches to both the definition and measurement of criteria that affect the complex reality of the poor." authors' abstractCollective action, Property rights, Poverty reduction, evaluation, Vulnerability, Power, Institutions, Wellbeing,