Livelihood Shocks and Coping Strategies: An Empirical Study of Bangladesh Households

Abstract

Households plan strategically for facing risks associated with livelihood security. Choosing a particular set of coping strategies depends on a number of factors including the types of crisis households face and options available. Often, poor households risk future income generating capacity for maintaining current food consumption. This paper examines strategies used by rural households for coping with the shocks and investigates whether there is any distinctive pattern in adopting these strategies. Using a cross section data set covering 1600 households from the northwestern Bangladesh, we estimate a trivariate probit model for explaining the adoption of coping strategies. Results indicate that choice of coping strategies depend on diversity and stability of household income sources. Households with higher education have greater access to stable incomes sources and have more income sources, and so are less likely to adopt ex-post coping strategies. Households with more assets are more likely to divest assets or obtain secured loans rather than rely on unsecured loans. Wealthier households are not less likely to adopt current adjustment strategies, suggesting that there is a general sequence of coping strategies that all households follow, irrespective of the assets they own.Consumer/Household Economics,