Estimating household vulnerability to poverty from cross section data: an empirical evidence from Ghana

Novignon, Jacob (2010): Estimating household vulnerability to poverty from cross section data: an empirical evidence from Ghana.

Abstract

Background In many developing countries, policies aimed at improving welfare through poverty reduction tend to target the current poor to the neglect of the vulnerable. An understanding of household susceptibility to future poverty will be crucial for sustainable growth and development. The objective of the study is to assess ex-ante welfare through vulnerability to poverty estimates among households in Ghana and to examine the effect of various socioeconomic characteristics on vulnerability to poverty. Method The study uses cross section data from the fifth round of the Ghana Living Standards Survey (GLSS) with a nationally representative sample of 8,687 households from all administrative regions in Ghana. The study employs a three step Feasible Generalized Least Squares (FGLS) estimation procedure to estimate vulnerability to poverty and to model the effect of household socioeconomic status on expected future consumption and variations in future consumption. Results The results show that, about 56% of households in Ghana are vulnerable to poverty and this is significantly higher than observed poverty level of about 28%. While the Eastern region was found to have the highest average vulnerability of approximately 73%, the Upper West region had the least vulnerability with about 21% average vulnerability to poverty. Other regions with relatively high incidence of vulnerability to poverty include the Western region (70%) and the Volta region (69%). Vulnerability to poverty was estimated to be 61% among urban households and 25% among rural households. Moreover, household health status, household size and education attainments significantly influence vulnerability to poverty. Male headed households were found to be less vulnerable to future poverty. Conclusion The results suggest that poverty and vulnerability to poverty are independent concepts. This implies that policies directed towards poverty reduction need to take into account the vulnerability of current non-poor households. Also, various household characteristics should be considered in developing poverty reduction strategies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Vulnerability to poverty; ex-ante welfare; poverty; Ghana
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B21 - Microeconomics

References

Alayande, B. and O. Alayande (2004). A quantitative and qualitative assessment of vulnerability to poverty in Nigeria. CSAE conference on poverty reduction, growth and human development in Africa. St. Cathrine's College, Oxford.

Amemiya, T. (1977). "The maximum likelihood estimator and the non-linear three-stage least squares estimator in the general non-linear simultaneous equation model." Econometrica 45(4): 955-968.

Appiah-Kubi, K., D. A. Oduro, et al. (2005). Understanding Poverty in Ghana: Risk and Vulnerability. The economy of Ghana: Analytical perspective on stability, growth and poverty. E. Aryeetey and R. Kanbur. Oxford, James Currey Publishers.

Asenso-Okyere, W. K., N. N. N. Nsowah-Nuamah, et al. (1997). Characterising the poor in Ghana: alogit approach. Sustainable food security in West Africa. W. K. Asenso-Okyere, G. Benneh and W. Tims. Dordrecht, Kluwer academic publishers.

Azam, S. and K. S. Imai (2009). "Vulnerability and poverty in Bangladesh." Chronic Poverty Research Centre Working Paper No.141.

Boateng, K., L. Boakye-Yiadom, et al. (2001). Poverty in Ghana. Nairobi, African Economic Research Consortium.

Calvo, C. and S. Dercon (2005). Measuring individual vulnerability. Economics series working paper. Oxford, Department of Economics, University of Oxford.

Canagarajah, S., D. Mazumdar, et al. (1998). The structure and determinants of inequality and poverty reduction in Ghana. Policy Research Working Paper. Washington D. C, The World Bank.

Chaudhuri, S. (2000). Empirical methods for assessing household vulnerability to poverty Mimeo. New York, Columbia University.

Chaudhuri, S. (2003). Assessing vulnerability to poverty: Concepts, empirical methods and illustrative examples. New York, Columbia University.

Chaudhuri, S., J. Jalan, et al. (2002). "Assessing household vulnerability to poverty from cross sectional data: a methodology and estimates from Indonesia." Department of economics discussion Paper No. 0102-52. University of Columbia.

Chiwaula, L. S., R. Witt, et al. (2011). "An asset based approach to vulnerability to poverty: The case of small scale fishing areas in Cameroon and Nigeria." Journal of Development Studies 47(2): 338-353.

Christiaensen, L. (2004). Measuring household vulnerability: conceptual issues and illustrative examples. PADI conference on measuring, understanding and alleviating household vulnerability. Dar es Salam.

Christiaensen, L. J. and R. N. Boisvert (2000). "On measuring food vulnerability: case evidence from northern Mali." Department of Economics, Resource and Managerial Economics Working Paper No. 2000-05.

Christiaensen, L. J. and K. Subbarao (2005). "Towards an understanding of household vulnerability in rural Kenya." Journal of African Economies 14(4): 520-558.

Grossman, M. (1972a). The demand for health: A theoretical and empirical investigation. New York, Columbia University Press.

GSS (2008). Ghana living standards survey: Report of the Fifth round. Accra, Ghana Statistical Service.

Hoddinott, J. and A. Quisumbing (2003). Methods of measuring microeconometric risk and vulnerability assessments. Social Protection Discussion Paper No. 0324. Washington D.C, The World Bank.

Jamal, H. (2009). "Assessing vulnerability to poverty: evidence from pakistan." Social Policy and Development Centre Research Report No. 80.

Kunfaa, E. Y. (1999). Consultations with the poor: Ghana country synthesis report. Kumasi, Center for the Development of People.

Ligon, E. and L. Schechter (2003). "Measuring Vulnerability." The Economic Journal 113(486): 95-102.

Makoka, D. (2008). The impact of drought on household vulnerability: the case of rural malawi. United Nations University (UNO-EHS) Summer Academy on Environmental Change, Migration and Social Vulnerability. Munich.

Nonvignon, J. and P. B. Aglobitse (2008). "The Choice of Health Care services by households in selected regions of ghana." Ghana Policy Journal 2: 34-50.

Nonvignon, J., K. S. M. Aikins, et al. (2010). "Treatment choices for fevers in children under-five years in a rural Ghanaian district." Malaria Journal 9(188).

Pritchett, L., A. Suryahadi, et al. (2000). Quantifying vulnerability to poverty: A proposed measure with application to Indonesia. Mimeo. Jakarta, Social Monitoring and Early Response Unit.

Suryahadi, A. and S. Sumarto (2003). "Poverty and vulnerability in Indonesia before and after the economic crises." Asian Economic Journal 17(1): 45-64.

Tendon, A. and R. Hasan (2005). "Conceptualizing and Measuring Poverty as Vulnerability: Does it make a difference?" Asian Development Bank Economic and Research Department Policy Brief Series No.41.

WHO (2009). World Health Statistics Report. Geneva, World Health Organization.

Zhang, Y. and G. Wan (2008). "Can we predict vulnerability to poverty." World Institute for Development Economics Research Paper No. 2008/82.