Overcoming Household Shocks: Do Asset-Accumulation Strategies Matter?

Abstract

This paper is motivated by the observation that the type and the combination of assets are associated with the likelihood of poor households' experience of shock. Focusing on the case of adivasi households in the south Indian state of Kerala, we find that the type, number and combinations of specific assets (primarily social and physical capital) yield varied magnitudes of association with households' experience of shock, which is a measure of vulnerability. Thus, going beyond mere welfare considerations, social policies that prioritise and sequence the type and combination of asset building based on contextual factors help minimise the incidence of shocks and improve livelihood choices.