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.

Keywords:

• asset accumulation
• shocks
• poverty
• adivasi
• Kerala

Acknowledgements

This paper was presented at the ‘Ten Years of War against Poverty’ Conference, organised by the Chronic Poverty Research Centre, the University of Manchester, 8–10 September 2010. The authors are grateful to Armando Barrientos, David Hulme and Kunal Sen for comments on earlier versions.

Notes

¹ Shock and asset ownership theoretically have a bi-causal relationship, however, we seek to explore at the association between assets and shocks, rather than its causality.

² Kerala has received attention for its achievements in social development and redistributive policies, despite its low economic development. The new Kerala model explicitly seeks reconciliation of its development objectives at the local level through decentralisation strategies.

³ Ambiguous land transactions were based on non-payment of price or at nominal prices through sale of commodities such as salt, liquor and tobacco with or without their conscious concurrence (Banu 2001; Kalathil 2004).

⁴ We are grateful to the anonymous reviewer for pointing this out.

⁵ Woolcock (1999) distinguishes two types of ties in social capital, bridging (weaker ties) and bonding (stronger ties).

⁶ The spatial concentration of adivasis is marked in Kerala, with the district of Waynad accounting for 36% per cent of adivasis, while Idukki and Palakkad (mostly the region of Attapady) account for 26% per cent (Government of Kerala 2007).

⁷ Only two-thirds of the total loan is given, the rest is seen as commission, with a weekly remittance of Rs. 100.

⁸ Strong dislike for mainstream health systems due to previous negative experiences was common.

⁹ Kudumbashree —‘prosperity of the family’ —is an poverty alleviation programme of the state of Kerala's State Poverty Eradication Mission (SPEM) since 1999. This is a women-oriented, participatory and integrated approach to fight poverty with the support of the central government and National Board for Agricultural and Rural Development (NABARD) (GOK 2007).

¹⁰ In September 2001, starvation deaths in the adivasi -dominant region of Wayanad led adivasi activists to engage in land agitation campaigns in the Muthanga region, ending in a violent struggle with state authorities.

¹¹ This pre-empts further exploration into the different types of known social networks. Interacting with any of the known social networks seemed insignificant in explaining household experience of shock, with the exception of households that have networks with both NGO and a women's group.