Some Workable Solutions for the Vulnerable Householder

Deaton (1992) suggested that householders could hold buffer stocks in the form of assets that can be liquidated in the event of an income shock (these could be physical and other tradeable assets). These of course have their own vulnerability as safety from opportunists and thieves might be an issue.

Diagne et al. (1998) identified credit holds in their Malawi and Bangladesh case studies or reserves to overcome consumption smoothing. In other words, they hold the option to borrow and use their credit when it is needed the most.

Also there is evidence that human capital build (such as extended family or having a large family) can bring about greater opportunities and avenues for income and consumption smoothing.

Finally, Grootaert (1998) observed that precautionary savings in the form of social capital (e.g., investing in personal relationships and memberships in social institutions) can impact food security and consumption. They observed that having more social capital “can increase one’s (insurance) claims towards society” (Zeller 1999, p. 9).

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