scispace - formally typeset
Search or ask a question

Showing papers on "Consumption (economics) published in 1997"


Journal ArticleDOI
TL;DR: In this paper, the authors model a consumer's efforts to reduce the discount on future utilities and show how wealth, mortality, addictions, uncertainty, and other variables affect the degree of time preference.
Abstract: We model a consumer's efforts to reduce the discount on future utilities. Our analysis shows how wealth, mortality, addictions, uncertainty, and other variables affect the degree of time preference. In addition to working out many implications of the model, we discuss evidence on consumption, savings, equilibrium, and the dynamics of inequality. We claim that most ofthat evidence is consistent with the predictions of our approach.

1,367 citations


Journal ArticleDOI
TL;DR: This paper argued that the typical household saving behavior is better described by a buffer stock model than by the traditional version of the Life Cycle/Permanent Income Hypothesis (LC/PIH) model.
Abstract: This paper argues that the typical household’s saving is better described by a “bufferstock” version than by the traditional version of the Life Cycle/Permanent Income Hypothesis (LC/PIH) model. Buffer-stock behavior emerges if consumers with important income uncertainty are sufficiently impatient. In the traditional model, consumption growth is determined solely by tastes; in contrast, buffer-stock consumers set average consumption growth equal to average labor income growth, regardless of tastes. The model can explain three empirical puzzles: the “consumption/income parallel” of Carroll and Summers [1991]; the “consumption/income divergence” first documented in the 1930's; and the temporal stability of the household age/wealth profile despite the unpredictability of idiosyncratic wealth changes.

1,207 citations


Journal ArticleDOI
TL;DR: In this article, the authors describe and illustrate a hermeneutically grounded interpretive framework for deriving marketing-relevant insights from the "texts" of consumer stories.
Abstract: The author describes and illustrates a hermeneutically grounded interpretive framework for deriving marketing-relevant insights from the “texts” of consumer stories and gives an overview of the phi...

1,017 citations


Posted Content
TL;DR: The authors employed cohort technique and consumer expenditure survey data to construct average age-profiles of consumption and income over the working lives of typical households across different education and occupation groups, using these profiles, they estimate a structural model of optimal life-cycle consumption expenditures in the presence of realistic labour income uncertainty.
Abstract: This paper employs cohort technique and Consumer Expenditure Survey data to construct average age-profiles of consumption and income over the working lives of typical households across different education and occupation groups. Using these profiles, we estimate a structural model of optimal life-cycle consumption expenditures in the presence of realistic labour income uncertainty. The model fits the profiles quite well. In addition to providing tight estimates of the discount rate and risk aversion, we find that consumer behaviour changes strikingly over the life-cycle. Young consumers behave as buffer-stock agents. Around the age of 40, the typical household starts accumulating liquid assets for retirement and its behaviour mimics more closely that of a certainty equivalent consumer. This change in behaviour is mostly driven by the life-cycle profile of expected income. Our methodology provides a natural decomposition of saving into its precautionary and retirement components.

944 citations


Journal ArticleDOI
TL;DR: The authors used the Panel Study of Income Dynamics to provide evidence that wealth is systematically higher for consumers with higher income uncertainty than those with lower income uncertainty, and found that over most of their working life time, consumers behave in accordance with the "buffer-stock" models of saving described in Carroll (1992, 1997) or Deaton (1991).

592 citations


Posted Content
TL;DR: In this article, the authors measured the benefits of increased UI generosity, in terms of smoothing consumption across periods of joblessness, through a reduced form approach which directly measures the effect of legislated variations in UI benefits on consumption changes among individuals becoming unemployed.
Abstract: Previous research on unemployment insurance (UI) has focused on the costs of the program, in terms of the distorting effects of generous UI benefits on worker and firm behavior. For assessing the optimal size of an unemployment insurance program, however, it is also important to gauge the benefits of increased UI generosity, in terms of smoothing consumption across periods of joblessness. I do so through a reduced form approach which directly measures the effect of legislated variations in UI benefits on consumption changes among individuals becoming unemployed. I use annual observations on food consumption expenditures for 1968-1987 from the Panel Study of Income Dynamics, matched to information on the UI benefits for which unemployed persons were eligible in each state and year. I estimate that a 10 percentage point increase in the UI replacement rate leads to a consumption fall upon unemployment which is 2.7% smaller. Over this period, the average fall in consumption for the unemployed was 7%; my results imply that, in the absence of unemployment insurance, this fall would have been over three times as large. I also find that the positive effect of UI only extends for one period, smoothing consumption during initial job loss but having no permanent effect on consumption levels; that individuals who anticipate layoff see a smaller consumption smoothing effect; and that UI appears to somewhat crowd out other forms of public consumption insurance. Despite the substantial estimated consumption smoothing effect, however, my results imply that the optimal UI benefit level is within the range of current replacement rates only at fairly high levels of risk aversion.

570 citations


Journal ArticleDOI
TL;DR: In this article, the authors used dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth, and they showed that growth is affected by the nonhomotheticity of preferences and vice versa.
Abstract: In this paper, the author uses dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth. She shows that growth is affected by sectoral composition and vice versa. The model is basically a Solow model of sustained growth with multiple consumption goods and nonhomothetic preferences. Each consumption good is produced using different factor intensities. The rate of exogenous technological change is different in each sector. Nonhomotheticity of preferences drives the result that sectoral composition affects growth rates. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

531 citations


Journal ArticleDOI
TL;DR: In this article, the authors examined the relation between accumulated wealth and the shape of the consumption profile and found very little support for life cycle models that rely on the above factors to explain wealth variation.
Abstract: Household survey data consistently depict large variations in saving and wealth, even among households with similar socio-economic characteristics. Within the context of the life cycle hypothesis, families with identical lifetime resources might choose to accumulate different levels of wealth for a variety of reasons, including variation in time preference rates, risk tolerance, exposure to uncertainty, relative tastes for work and leisure at advanced ages, income replacement rates, and so forth. These factors can be divided into a small number of classes, each with a distinctive implication concerning the relation between accumulated wealth and the shape of the consumption profile. By examining this relation empirically, one can test for the presence or absence of particular factors. Using the Panel Study of Income Dynamics and the Consumer Expenditure Survey, we find very little support for life cycle models that rely on the above factors to explain wealth variation. The data are, however, consistent with "rule of thumb" or "mental accounting" theories of wealth accumulation.

499 citations


Posted Content
TL;DR: In this paper, the theory of interest was restated and the output of capital goods and of consumption was analyzed in terms of uncertainty and fluctuations of investment, and demand and supply for output as a whole.
Abstract: I. Comments on the four discussions in the previous issue of points in the General Theory, 209. — II. Certain definite points on which the writer diverges from previous theories, 212. — The theory of interest restated, 215. — Uncertainties and fluctuations of investment, 217. — III. Demand and Supply for output as a whole, 219. — The output of capital goods and of consumption, 221.

478 citations


Journal ArticleDOI
TL;DR: For example, this article found that people with relatively greater electrical activity in the left prefrontal region of the brain are likely to indicate strong agreement with statements like the ones above, while those with relatively higher electrical activity on the right prefrontal region are much more likely to disagree with these statements.
Abstract: Does consuming more goods make people happier? For a broad spectrum of goods, available evidence suggests that beyond some point the answer is essentially no. Much of this evidence is from the large and growing scientific literature on the determinants of life-satisfaction and psychological well-being.1 Evidence from this literature also suggests, however, that there are ways of spending time and money that do have the potential to increase people's satisfaction with their lives, and herein lies a message of considerable importance for policy-makers. The psychologist's conception of human well-being is somewhat different from the economist's. Economists speak of an individual's utility, which in traditional economic models is assumed to be an increasing function of present and future consumption of goods, leisure, and other amenities that people typically view as desirable. Faced with a limited income, the individual is assumed to choose among alternatives so as to maximise her utility. The analogous construct in the psychological literature is 'subjective well-being', a composite measure of life satisfaction, positive affect, and negative affect. Operational measures of subjective well-being take one of several forms. By far the most popular approach in the psychological literature has been simply to ask people how happy or satisfied they are.2 For example, people may be asked to respond, on a numerical scale, to a question like, 'All things considered, how satisfied are you with your life as a whole these days?' Or, 'Thinking of your life as a whole, would you consider yourself (a) very happy; (b) fairly happy; or (c) not happy.' Another approach measures the frequency and intensity of positive affect by asking people the extent to which they agree with such statements as: 'When good things happen to me, it strongly affects me.' More recently, neuroscientists have also used brainwave data to assess positive and negative affect. Subjects with relatively greater electrical activity in the left prefrontal region of the brain are likely to indicate strong agreement with statements like the ones above, while those with relatively greater electrical activity in the right prefrontal region are much more likely to disagree with these statements.3 The left prefrontal region of the brain is rich in receptors for the neurotransmitter dopamine, higher concentrations of which been shown independently to be correlated with positive affect.4

477 citations


Report SeriesDOI
TL;DR: In this paper, the authors place the debate over using consumption or income in studies of inequality growth in a formal intertemporal setting and highlight the importance of permanent and transitory income uncertainty in the evaluation of growth in consumption inequality.
Abstract: This paper places the debate over using consumption or income in studies of inequality growth in a formal intertemporal setting. It highlights the importance of permanent and transitory income uncertainty in the evaluation of growth in consumption inequality. We derive conditions under which the growth of variances and covariances of income and consumption can be used to separately identify the growth in the variance of permanent and transitory income shocks. Household data from Britain for the period 1968-1992 are used to show a strong growth in transitory inequality toward the end of this period, while younger cohorts are shown to face significantly higher levels of permanent inequality.

Posted Content
TL;DR: Jalan et al. as mentioned in this paper found that those in the poorest wealth decile are the least well-insured, with 40 percent of an income shock being passed on to current consumption.
Abstract: In rural China, those in the poorest wealth decile are the least well-insured, with 40 percent of an income shock being passed on to current consumption. By contrast, consumption by the richest third of households is protected from almost 90 percent of an income shock. Jalan and Ravallion test how well consumption is insured against income risk in a panel of sampled households in rural China. They estimate the risk insurance models by Generalized Method of Moments, treating income and household size as endogenous. Insurance exists for all wealth groups, although the hypothesis of perfect insurance is universally rejected. Those in the poorest wealth decile are the least well-insured, with 40 percent of an income shock being passed on to current consumption. By contrast, consumption by the richest third of households is protected from almost 90 percent of an income shock. The extent of insurance in a given wealth stratum varies little between poor and nonpoor areas. This paper - a product of the Development Research Group - is part of a larger effort in the group to understand private insurance arrangements in poor rural economies. The study was funded by the Bank's Research Support Budget under the research project Dynamics of Poverty in Rural China (RPO 678-69).

Posted Content
TL;DR: In this article, the authors used dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth, and they showed that growth is affected by the nonhomotheticity of preferences and vice versa.
Abstract: In this paper, the author uses dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth. She shows that growth is affected by sectoral composition and vice versa. The model is basically a Solow model of sustained growth with multiple consumption goods and nonhomothetic preferences. Each consumption good is produced using different factor intensities. The rate of exogenous technological change is different in each sector. Nonhomotheticity of preferences drives the result that sectoral composition affects growth rates. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Journal ArticleDOI
TL;DR: The authors argue that consumers are engaged in authentic choices in the construction and communication of self and social meanings, and that these consumption choices can be conceptualized as the exercise of existential freedom, even if constrained by inequalities in the economic system and by ideological hegemony.
Abstract: In postmodernity, consumption is a prime site for the negotiation of conflicting themes of freedom and control. Explores the consumption of symbolic meaning through five consumption dialectics: the material versus the symbolic, the social versus the self, desire versus satisfaction, rationality versus irrationality, and creativity versus constraint. Argues that consumers are engaged in authentic choices in the construction and communication of self and social meanings, and that these consumption choices can be conceptualized as the exercise of existential freedom, even if constrained by inequalities in the economic system and by ideological hegemony.

Journal ArticleDOI
TL;DR: In this paper, the Chamley and Judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale, and for a class of widely used preferences, consumption taxes are zero in this limit as well.

Journal ArticleDOI
TL;DR: In this article, the authors examine the robustness of the full-insurance hypothesis in the context of household-level risk sharing in high-risk agrarian economies and propose a different specification that generates consistent estimates under both the null and the alternative.
Abstract: THE PROTECTION OF POOR HOUSEHOLDS in high-risk agrarian economies from shocks to their incomes has often been seen as a compelling motive for various forms of policy intervention including transfers of cash or food, credit subsidies, and public employment schemes (for a survey see Lipton and Ravallion (1995)). The desirability of such "safety net" policies clearly depends on how well pre-existing risk-sharing arrangements work. While it is commonly thought that, without effective policy intervention, rural households are vulnerable to village-wide shocks such as adverse prices or poor rains, it is less clear to what extent risk-sharing institutions within the village mitigate the effects of idiosyncratic income risk stemming, for instance, from ill-health or localized crop damage.2 Several recent papers have used household-level data to implement tests of risk-sharing that might inform such concerns.3 These tests are based on the proposition that with perfect risk-sharing, consumption at the household level should be insured against idiosyncratic risks and thus depend solely on the realization of the aggregate risk (Wilson (1968); Diamond (1967)). Townsend (1994) tests this implication of perfect intra-village risk-sharing using longitudinal household data on consumptions and incomes for three villages in India. He reports that the full-insurance hypothesis provides a surprisingly good benchmark in that household consumptions co-move and do not appear to be much influenced by contemporaneous own income. Our aim here is to examine the robustness of this potentially important finding. We have two main concerns. The first is that the specification Townsend adopts potentially biases his test towards the null hypothesis of full insurance because it yields inconsistent estimates of the key test parameter under a plausible alternative. We therefore estimate a different specification that generates consistent estimates under both the null and the alternative. Our second concern is that a particular form of measurement error in the consumption data Townsend uses may have further biased his results toward the null hypothesis of full-insurance. To address this concern, we use an instrumental variables procedure when we implement the test of consumption insurance with Townsend's consumption data. We also re-estimate the test equations with a measure of consumption derived from the same underlying primary data by an alternate method. Finally, Townsend reports 1Discussions with Robert Townsend stimulated our interest in this investigation. The staff of the

Journal ArticleDOI
01 Jan 1997
TL;DR: In this article, the authors assess the completeness and the sources of smoothing of idiosyncratic earnings variation and find that over the period 1970-91, earnings variation has grown by a striking 76 percent.
Abstract: THE LABOR MARKET in the United States is marked by considerable year-to-year variation in individual earnings.' In theory, variation in the earnings of family heads need not be a source of welfare loss to families. Families can rely on their own savings, the labor supply of other family members, and government tax and transfer programs to smooth this variation, so that family consumption remains unchanged. In practice, however, these sources of consumption smoothing may be far from adequate. This issue takes on particular salience in the United States today, because of a substantial increase in the instability of earnings over the past twenty years. As Peter Gottschalk and Robert Moffitt have shown, and as we confirm below, earnings variation has trended upward since the early 1970s. We estimate that over the period 1970-91, earnings variation has grown by a striking 76 percent. The purpose of this paper is to assess the completeness and the sources of smoothing of idiosyncratic earnings variation. We use two survey data sets with information on income and consumption to estimate the relationship between variation in the earnings of household heads and variation in their families' consumption. In our analysis, we employ an instrumental variables (IV) strategy designed to deal with

Journal ArticleDOI
TL;DR: This paper examined the individual difference variables of materialism and status consumption across three countries (U.S.A., Peoples Republic of China, and Mexico) of college students and found that status consumption and materialism are significantly different constructs in all three countries surveyed.
Abstract: This paper examines the individual difference variables of materialism (as measured by Richins and Dawson 1992) and status consumption (as measured by Kilsheimer 1993) across three countries (U.S.A., Peoples Republic of China, and Mexico) of college students. The study addresses the reliability of the two constraints as well as the relationship between these two constructs within and between countries. The results suggest that status consumption and materialism are significantly different constructs in all three countries surveyed. Additionally, while there are statistically significant differences in the materialism levels across all three countries, there are no statistically significant differences in the level of status consumption for the American, Chinese, and Mexican consumers surveyed. This suggests that consuming for status has equal importance in all three countries. The implications for international Marketing Managers are suggested.

Posted Content
TL;DR: In this article, the authors present an empirical methodology for estimating the degree of misallocation of housing units due to rent control in New York City by comparing the relative consumption of different demographic groups within the rent controlled area with the relative levels of consumption in a free market area.
Abstract: When there are binding price controls, there are shortages and the allocation of goods across consumers may not be efficient. In general, the misallocation costs of price controls are first order, while the classic welfare losses due to undersupply are second order. This paper presents an empirical methodology for estimating the degree of misallocation of housing units due to rent control in New York City. This methodology involves comparing the relative consumption of different demographic groups within the rent controlled area with the relative levels of consumption in a free market area. Our best estimate of the costs of rent control in New York due to the misallocation of rental apartments is 200 dollars per apartment annually.

Journal ArticleDOI
TL;DR: The authors found that the excess sensitivity varies over time, with a clear tendency to decline in the United States, Canada, the United Kingdom, Japan and France, and that the borrowing/lending wedge is a significant determinant of consumption in all countries considered.

Journal ArticleDOI
TL;DR: In this paper, the authors report an original study of the relationships between self-attributed need for uniqueness and several consumer dispositions, and find that these relationships are mediated by a latent variable reflecting individual differences in the tendency to pursue uniqueness through consumption.
Abstract: In this paper, we report an original study of the relationships between self-attributed need for uniqueness and several consumer dispositions. The results indicate that the self-attributed need for uniqueness is related to consumers' desires for scarce, innovative, and customized products and to consumers' preferences for unusual shopping venues, but not to consumers' susceptibilities to normative influence. Moreover, we find that these relationships are mediated by a latent variable reflecting individual differences in the tendency to pursue uniqueness through consumption. The theoretical and practical implications of these results are discussed along with directions for future research.

Journal ArticleDOI
TL;DR: It is shown that it is possible to force a life cycle interpretation on the data on consumption, income, and saving, but that the evidence is not consistent with large rate-of-growth effects, whereby economic and population growth enhances rates of national saving.
Abstract: This is a progress report on ongoing research into the effects of economic and population growth on national saving rates and inequality. The theoretical basis for the investigation is the life cycle model of saving and inequality. We report evidence that is conditional on the validity of the model, as well as evidence that casts doubt on it. Using time series of cross-sectional household surveys from Taiwan, Thailand, Britain, and the United States, we show that it is possible to force a life cycle interpretation on the data on consumption, income, and saving, but that the evidence is not consistent with large rate-of-growth effects, whereby economic and population growth enhances rates of national saving. The well-established cross-country link between economic growth and saving cannot be attributed to life cycle saving, nor will changes in economic or population growth exert large effects on saving within individual countries. There is evidence in favor of the life cycle model’s prediction that within-cohort inequality of consumption and of total income—though not necessarily inequality of earnings-—should increase with the age of the cohort. Decreases in the population growth rate redistribute population toward older, more unequal, cohorts, and can increase national inequality. We provide calculations on the magnitude of these effects.

Journal ArticleDOI
Mary Beth Mills1
TL;DR: In this article, the authors examine these consumption practices as important sites of cultural struggle in which young women seek to construct new identities and contest their marginalization within the wider society, albeit with conflicting and often ambivalent results.
Abstract: Rural women who move to Bangkok for employment confront significant social and economic constraints as low-wage, low-status migrant labor; yet experiences of exploitation in the workplace are widely mediated by aspirations for and participation in new patterns of commodity consumption. In this article, I examine these consumption practices as important sites of cultural struggle in which young women seek to construct new identities and contest their marginalization within the wider society, albeit with conflicting and often ambivalent results.

Journal ArticleDOI
TL;DR: In this article, the authors study long-run precautionary motives for life-cycle wealth accumulation and portfolios allowing for uncertain returns, incomes, and lifespan, and separate the effects of various factors on mean and median asset holdings, including education, risk aversion, household heterogeneity, bequests, impatience, variance and serial correlation of income shocks.

Posted Content
TL;DR: In this article, the authors investigated the effect of Medicaid eligibility on savings behavior by using data on asset holdings from the Survey of Income and Program Participation and on consumption from the Consumer Expenditure Survey, matched to information on the eligibility of each household for Medicaid.
Abstract: Recent theoretical work suggests that means and asset-tested social insurance programs can explain the low savings of lower income households in the U.S. We assess the validity of this hypothesis by investigating the effect of Medicaid, the health insurance program for low-income women and children, on savings behavior. We do so using data on asset holdings from the Survey of Income and Program Participation, and on consumption from the Consumer Expenditure Survey, matched to information on the eligibility of each household for Medicaid. Exogenous variation in Medicaid eligibility is provided by the dramatic expansion of this program over the 1984-1993 period. We document that Medicaid eligibility has a sizeable and significant negative effect on wealth holdings; we estimate that in 1993 the Medicaid program lowered wealth holdings by 17.7% among the eligible population. We confirm this finding by showing a strong positive association between Medicaid eligibility and consumption expenditures; in 1993, the program raised consumption expenditures among eligibles by 5.2%. We also exploit the fact that asset testing was phased out by the Medicaid program over this period to document that these Medicaid effects are much stronger in the presence of an asset test, confirming the importance of asset testing for household savings decisions.

Journal ArticleDOI
TL;DR: In this article, the authors examine the parallels which emerge between the ideas of some ecological economists concerning production and the idea of others concerning consumption, when these ideas are interpreted in the neoclassical paradigm.

Journal ArticleDOI
TL;DR: In this paper, the authors identify the growth rate in real per capita consumption, the real T-bill rate, the term structure of interest rates, and unexpected inflation as fundamental drivers or "state variables" that systematically affect real estate returns.
Abstract: A great deal of research has focused on the links between stock and bond market returns and macroeconomic events such as fluctuations in interest rates, inflation rates, and industrial production. Although the comovements of real estate and other asset prices suggests that these same systematic risk factors are likely to be priced in real estate markets, no study has formally addressed this issue. This study identifies the growth rate in real per capita consumption, the real T-bill rate, the term structure of interest rates, and unexpected inflation as fundamental drivers or “state variables” that systematically affect real estate returns. The finding of a consistently significant risk premium on consumption has important ramifications for the vast literature that has examined the (risk-adjusted) performance of real estate, for it suggests that prior findings of significant abnormal returns (either positive or negative) that have ignored consumption are potentially biased by an omitted variables problem. The results also have important implications for dynamic asset allocation strategies that involve the predictability of real estate returns using economic data.

Journal ArticleDOI
TL;DR: In this paper, the authors show the need for a new model of consumption by making clear the descriptive and normative shortcomings of consumer sovereignty, and propose a new sustainable consumption model to serve as a guideline for both responsible consumers and consumer policymakers and for all institutions concerned with the creation of sustainable development.
Abstract: The importance of consumption in modern societies is constantly growing. To guide consumer oriented policy, a model of consumption is needed which reflects consumers increased significance. The model of consumption prevailing in the theory of market economies as well as in consumer policy was traditionally based upon the notion of consumers sovereignty. This model served both as a description and as the ethical foundation of the market economy. In the first part of this paper, the authors show the need for a new model of consumption by making clear the descriptive and normative shortcomings of consumer sovereignty. In view of the reality of modern societies, it is neither possible nor ethically justifiable to make purchase decisions according to the individual maximization of utility only. The second part presents the idea, the ethical foundation, and the contents of the new model of "sustainable consumption." This model is proposed to serve as a guideline for both responsible consumers and consumer policymakers and for all institutions concerned with the creation of a sustainable development.

Journal ArticleDOI
TL;DR: In this paper, the authors provided a consistent time series of poverty estimates for the period 1963-64 to 1992-93 for both the rural as well as the urban areas, examined the influence of macroeconomic policies on the poverty levels, analyzed the impact of Structural Adjustment Programmes on the levels of poverty, and suggested a strategy for poverty alleviation in Pakistan.
Abstract: The paper provides a consistent time-series of poverty estimates for the period 1963- 64 to 1992-93 for both the rural as well as the urban areas, examines the influence of macroeconomic policies on the poverty levels, analyses the impact of Structural Adjustment Programmes on the levels of poverty, and suggests a strategy for poverty alleviation in Pakistan. The paper explores in particular the influence on poverty of such factors as economic growth, agricultural growth, terms of trade for the agriculture sector, industrial production, rate of inflation, employment, wages, remittances, and the tax structure. While the paper cautions that on account of the limited number of observations the results of the study should be interpreted cautiously, the study does suggest that the growth above a threshold level of about 5 percent, increase in employment, and remittances are the most important variables explaining the change in poverty over time. The paper also comes to the conclusion that the policies pursued under the Structural Adjustment Programme have tended to increase the poverty levels mainly because of decline in growth rates, withdrawal of subsidies on agricultural inputs and consumption, decline in employment, increase in indirect taxes, and decline in public expenditure on social services. The paper also outlines a strategy for poverty eradication and argues that besides the safety nets, the employment programmes, as well as promotion of informal sector enterprises, are essential.

Journal ArticleDOI
TL;DR: The authors explores the creation and distribution of effective risk, estimating how environment, technology, and social factors interact to construct it endogenously, and develops the notion that the risk from which households ex post try to insulate consumption is not an immutable natural or technical feature of the landscape.
Abstract: two preoccupations are not mutually exclusive. Superficially, they share the common concern that liberalization is insufficient to resolve the subSaharan food crisis. At a deeper level, the two preoccupations are more intimately interrelated via the correspondence that links initial wealth to risk exposure and to behavior in both production and asset accumulation. A number of recent empirical studies of risk in low-income countries find that households are able to employ their accumulated assets to smooth consumption in the face of adverse agricultural production shocks. 3 Missing from these studies is explicit attention to the fact that the effective risk from which households insulate consumption is not that of production shocks directly, but of those shocks as socially articulated by institutions and property rights. This article explores the creation and distribution of effective risk, estimating how environment, technology, and social factors interact to construct it endogenously. 4 Put differently, this article develops the notion that the risk from which households ex post try to insulate consumption is not an immutable natural or technical feature of the landscape. As Michael Watt’s contrast between precolonial and colonial Nigeria forcefully demonstrates, the effective risk presented by an unchanged set of environmental and technical circumstances can