How Do the Poor Cope with Shocks in Bangladesh? Evidence from Survey Data

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...

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Bibliographic Details
Main Authors:	Santos, Indhira, Sharif, Iffath, Rahman, Hossain Zillur, Zaman, Hassan
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCESS TO CREDIT ACCESS TO SAVINGS ACCESS TO SERVICES AGRICULTURAL PRODUCTS BORROWING BUSINESS ACTIVITIES CAPITA EXPENDITURE CASH TRANSFERS CHILD GROWTH CHRONIC POVERTY CONSUMPTION EXPENDITURE CONSUMPTION INSURANCE COPING STRATEGIES COVARIATE SHOCKS CREDIT MARKETS CREDIT PROGRAMS CREDIT-WORTHINESS DEBT DESCRIPTION DEVELOPMENT ECONOMICS DOWRIES DOWRY ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC SHOCK ECONOMIC SHOCKS EDUCATION LEVELS ENDOWMENTS EX POST COPING STRATEGIES EXPENDITURE EXPENDITURE DISTRIBUTION EXPLANATORY VARIABLES EXPORT EARNINGS EXTREME POVERTY FEMALE FINANCIAL ASSETS FINANCIAL CRISIS FINANCIAL MARKETS FOOD CONSUMPTION FOOD ITEMS GENDER GEOGRAPHIC LOCATION HOMES HOUSEHOLD CONSUMPTION HOUSEHOLD HEAD HOUSEHOLD HEADS HOUSEHOLD INCOME HOUSEHOLD POVERTY HOUSEHOLD SIZE HOUSEHOLD SURVEY HOUSEHOLD SURVEY DATA HOUSEHOLDS HUMAN CAPITAL HUMAN DEVELOPMENT IDIOSYNCRATIC SHOCKS INFORMAL CREDIT INSURANCE INSURANCE MARKETS INTERNATIONAL BANK INTERNATIONAL FOOD POLICY INTERVENTIONS JOB LOSS LABOR SUPPLY LOAN LOSS OF EMPLOYMENT MFIS MICRO-CREDIT MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MONEY LENDERS NUTRITION PHYSICAL CAPITAL POLITICAL ECONOMY POOR POOR HOUSEHOLDS POPULATION CENSUS POVERTY ASSESSMENT POVERTY LINE POVERTY RATES POVERTY REDUCTION POVERTY STATUS PRODUCTIVE ASSETS PUBLIC ASSISTANCE PUBLIC SAFETY PUBLIC SAFETY NET PUBLIC SAFETY NETS RECESSION REMITTANCE REMITTANCES RISK SHARING RURAL RURAL AREAS RURAL HOUSEHOLDS SAFETY SAFETY NET SAFETY NET PROGRAMS SAFETY NETS SAVINGS SELF-EMPLOYMENT SHOCK SMALL BUSINESS SOCIAL PROTECTION SOURCE OF INCOME SOURCES OF INCOME STANDARD ERRORS STATISTICAL SIGNIFICANCE URBAN AREA URBAN AREAS URBANIZATION VILLAGES VULNERABLE GROUP
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110927114707 http://hdl.handle.net/10986/3573

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Summary:	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.

How Do the Poor Cope with Shocks in Bangladesh? Evidence from Survey Data

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