by andrew adjei-holmes (isser, uog) ernest aryeetey (isser, uog) christopher barrett (cornell...
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Idiosyncratic Shocks and Welfare Dynamics in Akwapim
South District :Some Preliminary Results
ByAndrew Adjei-Holmes (ISSER, UoG)
Ernest Aryeetey (ISSER, UoG) Christopher Barrett (Cornell University)
Robert Darko Osei (ISSER, UoG)Thomas Walker (Cornell University)
Presented at ISSER, 15th July, 2010
An introduction Main Research Questions Some Preliminary Results Some concluding remarks
Structure of Presentation
Idiosyncratic risks (shocks) tends to dominate covariate risks in rural incomes in Africa and Asia
They can affect household incomes directly – e.g. loss of job Such shocks affect rural incomes through asset
accumulation and productivity – funeral rites In Ghana, such shocks are widespread and are
important determinants of current incomes of rural households
Improving the management of such risks will improve the rate of asset accumulation by households – and therefore improve household incomes
An introduction
The ability of households to cope with such shocks depends on among other factors, how socially connected households are
Evidence suggests that shocks have persistent effects on asset dynamics of households that are least connected
There are different mechanisms that help households deal with such shocks –
Examples in Ghana include hometown associations (and others) and other informal insurance mechanisms such as funeral contributions.
The aim of the project is to ◦ study the nature of idiosyncratic shocks that
affects households, ◦ The effects of these shocks on households◦ The nature and type of mechanisms that help
mitigate the effects of these shocks
Some Preliminary Results
Darmang Pokrom Darmang
-40 -30 -20 -10 0 10 20 30 40
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65+
-40-30-20-10010203040
Pokrom
-50 -40 -30 -20 -10 0 10 20 30 40 50
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65+
-50-40-30-20-1001020304050
Oboadaka Konkonuru Oboadaka
-40 -30 -20 -10 0 10 20 30 40
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65+
-40-30-20-10010203040
Konkonuru
-40 -30 -20 -10 0 10 20 30 40
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65+
-40-30-20-10010203040
Male Male
Male Male Female Female
Female Female
Age Distribution of Households
Darmang Pokrom Oboadaka KonkonuruEastern Region National
None 8.8 11.6 22.0 12.8 14.5 16.8
Primary 21.6 28.3 28.4 16.1 36.4 35.5
Junior 61.5 50.0 37.6 59.1 24.7 21.8
Senior 2.0 5.8 5.7 6.0 5.4 7.4
More 0.1 0.0 0.1 0.1 4.4 6.5
Highest school level attended (per cent of respondents)
Damang seems to trail the other villages in terms of senior high school attainment
Junior school attainment is higher than the national average – lagged effects of capitation grant?
Reasons for leaving School (per cent of respondents)
The main reason why people would have left school is because they could not afford it
In Pokrom and Oboadaka people left to help parents – Is there a Pineapple story?
Darmang Pokrom Oboadaka Konkonuru
Had enough education 14.7 5.4 7.5 8.5
Failed exam 7.4 2.3 4.2 7.8No higher school/grade 0.7 2.3 0.0 1.6
Could not afford to go 66.9 72.3 62.5 69.8
To help parents 2.2 9.2 7.5 3.1
Was ill 0.0 3.8 1.7 2.3
Marriage/pregnancy 4.4 0.8 5.8 1.6
Other 3.7 3.8 10.8 5.4
Source of Drinking Water for Household
Konkonuru Oboadaka Pokrom DarmangEastern Region National
Well with pump / borehole 92.9 33.3 26.0 60.5 27.1 30.4
Well without pump - 48.0 2.7 24.7 13.0 10.3
River 1.2 17.3 63.0 7.4 20.4 11.4
Public pipe/tap 2.4 - 1.4 1.2 15.6 10.7
Private outside pipe/tap - 1.2 - 1.2 2.5 5.0
Neighbouring HH - 1.3 - - - -
Other 3.6 - 6.9 4.9 21.4 32.2
Occupation (per cent of respondents) Darmang Pokrom Oboadaka Konkonuru
ItemFemale
(%) Male (%)Female
(%) Male (%)Female
(%) Male (%)Female
(%) Male (%)Artisan 1.2 2.6 4.8 6.9Baker/cook 1.2 1.3Carpenter/carver 5.3 1.5 8.3Construction worker 2.6 1.5 8.3Factory worker 2.6 1.5 2.8Farmer 31.7 55.3 41.4 83.8 56.4 94.2 51.8 37.5Hairdresser 6.1 2.9 1.3 7.2Health worker 1.2 1.4Herbalist 1.4Mason 1.5 6.9Not in labor force 4.9 1.3 2.9 1.3 1.5 3.6 2.8Not specifiedOffice worker 1.3 1.5 1.2 2.8Other 8.5 5.3 2.9 1.5 1.3 4.8 2.8Shop attendant/trader 41.5 1.3 47.1 1.5 37.2 1.5 24.1 2.8Student 1.4Taxi/tro-tro driver 10.5 4.4 8.3Teacher 2.4 7.9 1.5 4.2Truck driver 1.2 1.3 2.9 Unemployed 1.3 2.9 2.6 2.4 1.4Total 77 71 70 72
Men are more likely to be employed as farmers generally –
However this is not true for Konkonuru
Women are more likely to be a shop attendant or trader
The Nsawam effect is quite evident in Damang – more taxi and trotro drivers
There are also signs of the Aburi effect on Konkonuru
Consumption by Households (Monthly GHC)
On average individuals in these communities are very close to the poverty line
Community
Food, purchased
Food, from farm
Other purchases
Total consumption
PC Cons/day (US$)
Darmang Total125.86 38.94 139.02 303.82
P/C 29.96 9.39 33.59 72.94 1.68
Pokrom Total88.75 42.61 177.58 308.94
P/C 18.91 9.21 33.58 61.7 1.42
Oboadaka Total77.43 51.48 107.72 236.63
P/C 17.6 11.68 25.14 54.42 1.25
Konkonuru Total125.75 28.4 139.36 293.51
P/C 33.83 7.12 34.63 75.58 1.74
Household Incomes (Over Past 2 months - GHc)
Income seems to be higher in the communities that do less farming of pineapples
Round FarmsOther
Bus. WagesOther Farms
Other Income
FarmCons’n
TotalIncome
Darmang 1 3.96 132.34 51.25 2.25 4.42 46.78 240.992 -12.27 131.26 68.22 7.97 7.29 43.34 245.813 -14.02 141.45 89.55 6.30 9.97 33.23 266.484 -7.88 125.84 72.31 2.29 12.13 37.50 242.195 -6.63 117.27 72.75 0.42 9.15 33.85 226.81
Pokrom 1 -27.87 11.29 38.58 14.87 15.19 47.35 99.412 -70.25 108.96 38.46 8.21 45.49 34.51 165.373 -25.66 63.00 28.11 1.04 22.04 39.49 128.034 -30.70 38.83 55.35 9.55 16.09 46.75 135.865 -29.29 57.59 31.02 18.77 36.13 44.96 159.18
Oboadaka 1 -3.98 20.74 35.84 15.21 0.00 57.46 125.272 -31.45 87.58 30.25 0.10 14.89 44.23 145.593 -18.16 59.98 25.07 1.57 25.11 44.02 137.604 -8.09 53.83 25.07 5.42 18.33 55.51 150.075 -6.83 37.84 20.56 0.85 24.76 56.17 133.36
Konko- 1 -0.27 174.92 93.79 -0.77 3.06 35.76 306.50Nuru 2 -2.52 93.21 150.14 3.15 21.31 27.44 292.72
3 -5.03 150.96 154.61 0.00 8.67 23.31 332.524 -3.77 137.04 147.82 0.00 12.23 25.83 319.155 -3.36 123.95 147.38 1.09 14.84 29.68 313.58
Mean Transfers – Given and received by age
Two interesting observations here Net transfers received is higher for older people (pensioners) Generally households are net receivers – consistent with
consumption > incomes
0
10
20
30
40
20 40 60 80 100 120 140 160 180
0
10
20
30
40
Cash transfers In-kind transfers
Receipts Receipts
GiftsGifts
20 40 60 80
GHc GHc
Household Asset- Mean GHC
Community Round Perishables Durables LivestockFinancial
assets Total assetsDarmang 1 65 839 170 1,099 2,174
2 32 1,669 182 1,013 2,8953 9 818 167 737 1,7314 27 859 185 979 2,0515 31 872 168 762 1,834
Pokrom 1 554 4,814 576 2,515 8,4602 251 3,790 597 1,501 6,1393 83 4,191 639 1,242 6,1564 194 3,422 641 1,121 5,3785 169 2,688 575 1,135 4,567
Oboadaka 1 167 493 233 885 1,7782 100 601 261 973 1,9353 72 648 272 757 1,7484 132 569 303 728 1,7325 166 550 263 668 1,647
Konkonuru 1 31 461 145 917 1,5532 19 517 194 873 1,6033 11 799 163 800 1,7734 16 500 164 715 1,395
5 19 477 140 922 1,558
Financial assets seem to dominate except for Pokrom where durables are quite important
Maybe related to history of pineapple business in pokrom
Pokrom still dominates in terms of total assets
Possibly driven by outliers
Shocks to the Household - Damang
ShockValue of Loss No of time
occurredExtent of
shock
Loss of productive assets 6,000 1 1Loss of contract or default by creditor 1,239 2 2Loss of a regular job of a household mem 1,140 1 1Death of other household member 814 1 1Loss or destruction of other consumption 433 1 2ACCIDENT (DESTRUCTION OF BEER BAR) 400 1 1Divorce, separation or abandonment 400 1 2Funeral expenses 354 3 2Loss of income due to illness or injury 293 1 1Failure or bankruptcy of business 257 2 2Death of household head or spouse 233 1 1Major loss of crops due to drought 200 1 2Loss of livestock due to theft 178 3 2Medical expenses due to illness or injury 176 2 2Division of father’s property 175 1 3Major loss of crops due to pests and dis 170 1 2Loss of livestock due to death 158 4 2Major loss of crops due to other reasons 150 1 2ACCIDENT 100 1 2
Shocks to the Household - Konkonuru
Shock
Value of Loss No of time occurred Extent of
shock
Loss of productive assets 400 1 1
DEATH OF 4 UNCLES 300 4 1
Division of father’s property 300 2 2
Funeral expenses 300 4 2
Major loss of crops due to other reasons 212 1 2
Loss or destruction of other consumption 200 2 2
Cut-off or decrease of regular remittanc 153 3 2
Loss of contract or default by creditor 135 8 2
Loss of livestock due to theft 132 3 2
Loss of livestock due to death 91 3 2
Failure or bankruptcy of business 82 1 3
DEATH OF MOTHER 50 1 3
Shocks to the Household - Oboadaka
ShockValue of Loss
No of time occurred
Extent of shock
COMPENSATION (SHOT AND KILLED A MAN) 5,000 1 1SHOT A MAN TO DEATH 5,000 1 1DUPED 3,000 1 1FRIEND DEFRAUDED HIM 2,900 1 1PREGNANCY EXPENSES 1,500 1 1Failure or bankruptcy of business 1,266 18 2Loss of contract or default by creditor 948 22 2COURT EXPENSES 920 1 1Funeral expenses 876 22 2Division of father’s property 800 2 1TWO CHILDREN IN SAME CLASS 400 1 2Withdrawal of government or NGO assistan 290 1 2LOW MARKET PRICE FOR PINEAPPLES 200 2 1MY DOG BIT SOMEBODY 200 1 4OUR DOG BIT SOMEBODY 200 1 3Loss of livestock due to death 166 2 3Loss of livestock due to theft 141 1 2Loss or destruction of other consumption 75 1 2Major loss of crops due to other reasons 53 1 1
Shocks to the Household - PokromShock Value of Loss No of time occurred Extent of shockLost home 5,000 1 1Cut-off or decrease of regular remittanc 4,600 2 1Death of household head or spouse 4,500 1 1Loss of a regular job of a household mem 4,355 1 1Loss of contract or default by creditor 1,779 1 1Failure or bankruptcy of business 1,119 1 1Funeral expenses 1,083 1 2Major loss of crops due to drought 833 1 3Major loss of crops due to other reasons 567 1 2Medical expenses due to illness or injur 548 2 2COURT CASE 500 1 2LOSS OF INCOME DUE ARREST OF FAMILY MEMB 500 2 1REPAIRS FOR DAMAGE TO ANOTHER VEHICLE 500 1 1Loss of productive assets 398 1 2Loss of income due to illness or injury 379 1 2Loss of livestock due to death 377 1 2Division of father’s property 316 1 2Loss or destruction of other consumption 225 1 2Major loss of crops due to pests and dis 200 1 3CHILD'S TRAVEL EXPENSES 150 1 2SON'S TRAVEL EXPENSES 150 1 2Death of other household member 140 1 1Loss of livestock due to theft 108 1 3Divorce, separation or abandonment 0 1 2
Coping Strategies of Households – Funeral expenses shock
Coping strategy Damang Konkonuru Oboadaka PokromAte less to reduce expenses 7.02 13.79 ----- 4.65
Ate lower quality food ----- ----- ----- 2.33
Forced to change occupation ----- ----- 2.04 -----
Mortgaged consumption asset ----- ----- 4.08 -----
Mortgaged productive asset 1.75 ----- ----- 4.65
None 36.84 41.38 32.65 48.84
Other ----- ----- 6.12 -----
Sold consumption asset 1.75 24.49 27.91
Sold land ----- 1.72 ----- -----
Sold productive asset 21.05 5.17 2.04 -----
Took children out of school ----- 1.72 ----- -----
Took help from others 7.02 29.31 20.41 6.98
Took loan from informal source 24.56 5.17 8.16 4.65
Took loan from NGO/institution ----- 1.72 ----- -----
Shocks◦ In value terms different shocks ranks differently in
different communities◦ In terms of the number of times these shocks
occur, funerals and death of hh member or relative is important – true across communities
Coping Strategies (Funerals)◦ Majority will not have done anything – could mean
‘most of the above’◦ Getting help from others, taking loans from
informal sources remain quite important Oboadaka and Pokrom, selling of assets is important
Most households in these communities are poor
Idiosyncratic shocks are significant and wide-ranging
Value of shocks sometimes exceed value of consumption
Selling of assets remain an important strategy for coping with these shocks
Other strategies rely on social networks – how connected the households are
Conclusion
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