Background Paper

A review of the ex post and

ex ante impacts of risk


Ana Maria Oviedo & Harry Moroz
The World Bank
1

A Review of the Ex Post and Ex Ante
Impacts of Risk

Background Paper for the World Development Report 2014
Ana Maria Oviedo*
Harry Moroz
*



*
The World Bank, Washington DC.
2

Table of Contents
Introduction ..................................................................................................................................... 3
Shocks: The Ex Post Impacts of Risk ............................................................................................. 4
Shocks are diverse....................................................................................................................... 4
A catalogue of shocks and their effects on consumption, productive assets, and human capital 5
Health shocks .......................................................................................................................... 5
Weather and crop shocks ........................................................................................................ 8
Famine................................................................................................................................... 12
Natural disasters .................................................................................................................... 14
Civil and political conflict and war ....................................................................................... 18
Food price fluctuations and macroeconomic shocks ............................................................ 20
Are multiple shocks different? .................................................................................................. 23
Multiple shocks and chronic poverty .................................................................................... 23
Shocks: The Ex Ante Impacts of Risk ........................................................................................... 24
Income diversification vs. income skewing .............................................................................. 24
Low-risk, low-return activities and other risk-driven behavior ................................................ 25
Are ex ante impacts economically meaningful? ....................................................................... 25
Risk and Poverty Traps ................................................................................................................. 26
Ex post impacts and poverty traps ............................................................................................ 26
Ex ante impacts and poverty traps ............................................................................................ 27
Conclusions ................................................................................................................................... 27
References ..................................................................................................................................... 29

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Introduction
Despite the impressive economic progress in the developing world seen in the last three decades,
a vast majority of people in these countries lives in or close to poverty, and is highly vulnerable
to shocks that can reduce their income and destroy their assetsfrom illness of an income-earner
to a natural disaster or a recession. Indeed, in 2010 more than half of the population of
developing countries still lived on less than US$2.50 a day per capita, and over 75 percent lived
on less than US$4 per day (World Bank, 2013). By and large, people living in or near poverty
have fewer means to invest in protection (to reduce risks) and in insurance (to reduce possible
losses). As a result, they are more likely to use harmful coping measures when shocks hit, such
as cutting back consumption of food or selling productive assets, which can hurt income
generation and human development in the long term. For many, the possibility of loss resulting
from a shock also leads to excessive risk avoidance and preference for low-risk, low-return
activities.
The transformation taking place in developing countries in the last years has changed the nature
of the risks that people are exposed to. For instance, the rapid urbanization process has been
accompanied by a substantial increase in the incidence of crime in Latin America and the
Caribbean and in Sub-Saharan Africa, while many factors, including climate change, have raised
the incidence of natural disasters all over the world. At the same time, risks that affected large
portions of the population in the past, such as maternal mortality, have receded in most of the
world (they remain notably high in Sub-Saharan Africa, with close to 500 deaths per 100,000
live births in 2010).
1

In this paper, we review the body of evidence available on how risk affects development
outcomes at the household level, in particular among the poor. The main contribution of the
review is to provide a careful categorization of the effects of different types of risk on welfare,
assets, human capital, and other outcomes at different points in the life cycle (for instance during
early childhood), but also the mechanisms through which risk affects these outcomes. Moreover,
the review distinguishes between the effects of idiosyncratic risk (for instance health shocks) and
aggregate risk, as well as between ex-post and ex-ante effects. Although other literature reviews
on risk and poverty have been done in the past, most of them focus on particular types of risk or
effects (Ahrend, Arnold and Moser, 2011), particular regions (Dercon, 2004b), or populations
(Friedman and Sturdy, 2011). This review offers a more comprehensive view of risk, taking into
account the multiple shocks that people and communities are exposed to, as well as the various
ways in which people manage them.
Ultimately, the paper attempts to draw policy relevant conclusions about the main obstacles that
people face in managing risk efficiently, that is, in their efforts to build resilience to shocks as
well as in their ability to pursue opportunities that entail facing certain risks. In doing so, the
paper identifies a number of empirical challenges that researchers still need to address to identify
more clearly the relationship between risks, obstacles to risk management, and outcomes.

1
World Bank 2013.
4

The paper is organized as follows. The first section reports on the evidence of the ex-post impact
of shocks, distinguishing between different types of shocks. Most studies documenting these
impacts look either at fluctuations in income and consumption as an indirect way to identify
shocks, or use self-reported data, or identify large aggregate shocks and compares populations
before and after the event. The section concludes with a review or the relatively more limited
literature on the impact of multiple shocks on poverty. The second section focuses on ex-ante
impacts, in particular reviewing the evidence on how risk determines decisions about economic
activity. The third section discusses the evidence of shocks as a driver of poverty traps. The last
section offers some concluding remarks.
Shocks: The Ex Post Impacts of Risk
Shocks are diverse
They include health shocks; natural hazards; famine; civil and political conflict; crime; and
aggregate or macroeconomic events (see, for example, Dercon, Hoddinott, and Woldehanna
2005; Baulch 2011) There is great diversity within these general groupings. For example, health
shocks encompass the sickness and death of individuals as well as epidemics affecting entire
communities. Natural hazards include climatic events such as drought, flooding, and severe
weather; geological events such as earthquakes; and agricultural events such as crop failures.
Aggregate shocks comprise food and other commodity price spikes, inflation, and recession.
Shocks can also be categorized by their scope (idiosyncratic or covariate) and by their frequency,
timing, and intensity (Christiaensen and Sarris 2007; see also Baulch 2011) Categorizing shocks
is often context-dependent: drought is normally covariate and slow onset, but can be recurrent or
sporadic and severe or mild depending on the location and the year. Non-epidemic health shocks
are idiosyncratic, but vary widely in frequency, timing, and intensity. Still, the origin of a shock
often reveals information about its characteristics.
Much of the literature identifies shocks as significant deviations from the ordinary: for example,
an unusual lack or excess of rainfall (drought or flood) or a large drop in economic output. This
identification strategy is also employed for idiosyncratic shocks, such as illness, for which
increases in the incidence of adverse health (e.g. Pitt and Rosenzweig 1990) and deteriorations in
health (e.g. Genoni 2012) are explored. This type of shock is often self-identified from survey
data asking about past experience of shocks, including drought, illness, or crop shocks. Other
research identifies a large (frequently negative) event, such as conflict or a natural disaster, and
explores the impact on households that are and are not affected by the event. For example, to
explore the impact of the 1998-2000 Eritrea-Ethiopian war on child health Akresh, Lucchetti,
and Thirumurthy (2012) use the following identification strategy, which is typical:

where

is height-for-age z-score for a child i born in period t in region j,

are region
fixed effects,

are birth cohort fixed effects,

are parental and household characteristics,

is an interaction term of two binary indicators denoting whether a

5

child was born in a war region and whether a child was alive during the war.

then indicates
the effect of the war on the height-for-age of children born during the war in a war region
(Akresh, Lucchetti, and Thirumurthy 2012) Research (including Akresh, Lucchetti, and
Thirumurthy (2012)) extends this initial strategy of the impact of whether a negative shock
occurred to investigate the impact of more and less exposure.
A catalogue of shocks and their effects on consumption, productive assets, and
human capital
Shocks can have short-term impacts on consumption and longer-term impacts on productive
assets and human capital. Shocks that reduce consumption are most severe for poor households
(Jalan and Ravallion 1999; Dercon, Hoddinott, and Woldehanna 2005; Webb, von Braun, and
Yohannes 1992) and for non-food items (Asfaw and von Braun 2004; Skoufias and Quisumbing
2005). Shocks can even lead households to sacrifice consumption rather than divest productive
assets in a process known as asset smoothing. (Kazianga and Udry 2006). In general, however,
shocks impair productive assets or necessitate their sale. Particularly harmful is the damage that
shocks can do to human capital by negatively affecting enrollment in school, educational
attainment, and health. These human capital impacts can be substantial and long-term and are
often experienced differently by different members of the household (Baez, de la Fuente, and
Santos 2010 for Latin America; Dercon 2004a and Dercon 2008 for Africa; Yamauchi 2012 for
East Asia and the Pacific)
Shocks with similar characteristics (e.g. idiosyncratic, severe, etc.) frequently have similar
impacts. However, most research investigates the consequences of shocks of a particular origin
(i.e. health, drought, earthquakes, etc.). This likely reflects the difficulty of comparing shocks
with exactly the same characteristics (e.g. idiosyncratic, infrequent, slow onset, and severe) and
the greater simplicity of comparing shocks of the same origin which have, broadly speaking,
similar characteristics. As a result, the paper will investigate impacts by the origin of shock.
Health shocks
Health shocks are costly events for households in the developing world (see, for example, Russel
2004 for malaria, tuberculosis, and HIV/AIDS). Studies in Cambodia, Ethiopia, Laos, and
Pakistan have shown the risk of illness to be among the most important that households face
(Kenjiro 2005; Dercon, Hoddinott, and Woldehana 2005; Wagstaff and Lindelow 2010; Heltberg
and Lund 2009; see also Hulme, Moore, and Shepherd 2003). Health shocks are frequently
identified using self-reported assessments (e.g Wagstaff and Lindelow 2010) as well as self-
ratings of ability to perform daily activities (ADLs) (e.g. Gertler and Gruber 2002; Genoni
2012).
Several studies find that health shocks do not impact consumption. Townsend (1994), which
investigates ICRISAT villages in southern India, is an early example. More recently, Islam and
Maitra (2012) examines self-reported health shocks in rural Bangladesh and concludes that such
shocks do not impact household consumption significantly. Another recent study, which
measures health shocks as deteriorations in physical functioning abilities, finds similar results for
health shocks among prime-age adults in Indonesia (Genoni 2012). There is evidence that the
6

impact of health shocks on consumption depends on the length of illness (Cochrane_1991) and
on the type of consumption (Skoufias and Quisumbing 2005). Summarizing results from several
studies, Skoufias and Quisumbing (2005) concludes that in Mali, Ethiopia, and rural Mexico
illness does not result in reduced food consumption.
But other studies find that health shocks can have significant impacts on consumption,
particularly of non-food items. There is some evidence that these impacts persist and that they
vary within households.
Studying villages in Ethiopia, Dercon, Hoddinott, and Woldehanna (2005) calculates that illness
reduces per capita consumption by 9 percent and finds evidence that household consumption is
still negatively impacted three to five years after an illness, drought, or output price shock.
Christiansen and Sarris (2007) shows that households experiencing either a drought or a health
shock in Kilimanjaro, Tanzania lost 8 percent of their consumption in the year in which they
experienced the shock, though no loss was observed in Ruvuma. Gertler and Gruber (2002)
analyzes health shocks by their severity and finds that serious illness is associated with a decline
in consumption of 0.84 percent.
2
Studies show malaria in non-arid rural Kenya and HIV/AIDS
among the poorest households in Zambia are related to decreased consumption, although there is
evidence that less poor households actually increase consumption in Zambia (Christiansen and
Subbarao 2005; del Ninno and Marini 2005). Several studies show that illness shocks reduce
consumption of nonfood, but not of food, items (Asfaw and von Braun 2004 for Ethiopia;
Wagstaff 2007 for Vietnam). Wagstaff and Lindelow (2010) provides contrasting results for the
impact of illness shocks on consumption in Laos, with consumption regressions suggesting little
impact but households themselves reporting consumption reductions. The self-assessments
suggest that health shocks are particularly harmful and affect the poor more severely.
Illness shocks can impact consumption growth, as well. In finding that nonfood consumption is
not protected after an illness shock to a household head, Asfaw and von Braun (2004) concludes
that the growth rate of quarterly nonfood consumption is between 23 and 28 percentage points
lower when a household head becomes unhealthy. Beegle, De Weerdt, and Dercon (2008)
analyzes the HIV/AIDS-affected Kagera region of Tanzania and finds that the consumption of
households experiencing an adult death falls by 7 percent in the five years following the death
while the consumption of the average household grows 13 percent. Female deaths are
particularly important. The authors do not find evidence of a lasting impact on consumption, but
provide some reasons why persistence is possible.
Some evidence suggests that the impact of health shocks can vary within households. Exploring
the extent to which individuals share risk within households, Dercon and Krishnan (2000) finds
that, unlike most other households, poor households in the southern part of Ethiopia do not shield
women from illness shocks. Van de Walle (2011) finds that widowed women in Mali have lower
welfare, an impact which continues after remarriage and persists in children.
There is some evidence that households sell productive assets like livestock to maintain
consumption in the face of health shocks. Islam and Maitra (2012) argues that the reason health

2
Genoni (2012) questions a causal interpretation of Gertler and Gruber (2002)s findings.
7

shocks do not reduce consumption significantly in Bangladesh is that households use livestock as
insurance, selling livestock when faced with illness (Islam and Maitra 2012, see especially
Footote 3). Kenjiro (2005) identifies a similar effect in Cambodia, concluding that the large and
lumpy expenses associated with treatment for illness make it necessary for households to sell
productive land in the face of health shocks, particularly when loan conditions are unfavorable.
Health shocks have significant, long-term consequences for human capital. The shocks can result
in adverse health outcomes, as well as delayed school attendance, lower probability of
enrollment, and reduced educational attainment. In the long-term, the shocks are associated with
lower income, employment, and socioeconomic outcomes. Effects extend to illness shocks
experienced in utero and to students affected by teachers illnesses. Maternal deaths have
particularly large effects. There is some evidence that mental health in general and stress, in
particular, have long-term impacts on human capital.
Several studies use the 1918 influenza pandemic to analyze the long-term impacts of health
shocks. In the United States, cohorts that were in utero during the pandemic had worse health
outcomes 65 to 80 years later (Almond 2006) and higher rates of physical disability as adults.
These cohorts also had lower educational attainment, income, and socioeconomic status and
received higher transfer payments (Almond 2006). Similar effects were found in Brazil, where
the cohort exposed in utero to the influenza completed fewer years of school, earned lower
wages, and were less likely to be employed and literate (Nelson 2010). Finally, Lin and Liu
(2012) finds that cohorts exposed in utero in Taiwan are shorter as teenagers; have more health
problems such as kidney disease, glaucoma, respiratory problems, and diabetes in old age; and
are less educated.
In contrast to the empirical strategies employed by the studies using the 1918 influenza
pandemic, Wagstaff and Lindelow (2010) uses subjective assessments to show that households
in Laos do not recover their subjective health after a health shock. Wealthier and better educated
households are not affected as severely (Wagstaff and Lindelow 2010)
Mental health shocks have also been found to have long-term consequences. For instance, Aizer,
Stroud, and Buka (2009) explores whether in utero exposure to elevated levels of the stress
hormone cortisol are related to educational attainment in the United States (Aizer, Stroud, and
Buka 2009). The authors find that such exposure has negative effects on educational attainment,
with health the probability of a severe chronic health condition and cognition verbal IQ at
age 7 as possible mechanisms.
Adults deaths have a significant impact on human capital. In the short term, adults deaths can
lead to delays in school attendance and reductions in hours of attendance before and after the
adult death, though these impacts vary by age and gender (Ainsworth, Beegle, and Koda 2005
for Tanzania). Beegle, De Weerdt, and Dercon (2008) shows that long-term effects are possible,
as well. The study finds that adults maternally orphaned between the ages of 7 and 15 were 2
centimeters shorter in adulthood, attained one fewer year of education, and expended 8.5% less
on consumption. Beegle, De Weerdt, and Dercon (2008) notes that The larger effect for
maternal deaths is clearly a pattern emerging from the existing literature. (Beegle, De Weerdt,
and Dercon 2008 at p.177)
8

The negative impacts of health shocks extend beyond the individual or household experiencing
the illness. For instance, Das, Dercon, Habyarimana, and Krishnan (2007) shows that a 5 percent
increase in absences among teachers in Zambia reduces gains in English and Mathematics by 4
to 8 percent of the annual average. Sixty percent of these absences are a result of teacher illness
or the illness of teachers family members. Case, Paxson, and Ableidinger (2004) studies 10 sub-
Saharan African countries and finds that orphanhood reduces the likelihood of school
enrollment. Bennell (2005), in contrast, argues that the effect of parental mortality on school
enrollment is not as strong as commonly believed.
Health shocks often have differential impacts across gender. For instance, Pitt and Rosenzweig
(1990) shows that an increase the incidence of sickness among children in Indonesia worsens
inequalities in human capital between male and female teenagers as teenage daughters shift away
from schooling and toward household care and market activities. In a very different context, a
recent study of HIV in Kenya, Liberia, Malawi, Mali, Zambia, and Zimbabwe finds an
association between an increase in the diseases prevalence and an increased risk of physical and
sexual violence against women within marriage (Chin 2012). Finally, Vlassof (2007) extends a
framework developed for tropical diseases to categorize gender differences in the social,
biological, and economic consequences of illness. Significantly, Vlassof (2007) points out that
social support in the face of illness often varies by gender with a widespread gender bias
towards men which allows them to cope will illness more effectively (Vlassof 2007 at p.57)
Weather and crop shocks
Drought and rainfall shocks are a common occurrence in much of the developing world. The
negative and at times lasting impacts of these shocks are well documented. While even a single
incidence of drought can have significant adverse consequences, cycles of drought during which
households are unable to recover savings and other assets before the next rainfall shock can
perpetuate and lead to poverty for less wealthy households. Drought and rainfall shocks are
frequently identified using survey data asking whether such a household has experienced such a
shock in the past, though the use of historical rainfall data is also widespread.
Some households are unable to cope with drought and rainfall shocks and maintain their pre-
shock consumption. This is particularly true of poorer households, in arid climates, and in the
short term. Two studies of rainfall shocks and drought in Ethiopia find substantial impacts on
consumption. While cautioning against generalizing the results, Dercon (2004a) finds a link
between low rainfall and consumption growth four to five years later. Ten percent less rainfall
reduced growth rates by one percentage point. Dercon, Hoddinott, and Woldehanna (2005)
studies shocks in 15 Ethiopian villages between 1999 and 2004 and finds that drought and
illness, unlike other shocks such as crop pestilence or flooding, have a negative impact on per
capita consumption. The negative impact of drought is substantial: at least one drought in the
previous five years is associated with approximately 20 percent lower per capita consumption.
The effect is not experienced uniformly across households: the impact is particularly strong for
female-headed households, households in which the household head lacks schooling, and
households in the bottom three quintiles of landholding.
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Interestingly, incorporating additional data from Ethiopia Porter (2012) presents evidence that
the severity of rainfall shocks matters. In particular, rainfall in the bottom quintile of the local
rainfall distribution can reduce consumption by 10 to 20 percent while households are able to
smooth consumption in the face of less severe rainfall shocks. In rural Kenya, Christiansen and
Subbarao (2005) concludes that households in drought prone areas clearly unable to protect
their consumption from rainfall shocks (Christiansen and Subbarao 2005 at p.541). Findings for
Tanzania are somewhat mixed, with a drought or rainfall shock leading to an 8 percent loss in
consumption in the same year as the shock in Kilimanjaro but not in Ruvuma.
3

As in the case of health shocks, drought and rainfall shocks can be particularly harmful when
they result in divestiture of productive assets. Very often, poorer households are unable to
recover fully from divestitures associated with one drought before another begins. In the worst
cases, this drought-recovery cycle can create a poverty trap. Rosenzweig and Wolpin (1993), for
example, finds that households in India use bullocks to smooth consumption when weather
outcomes are poor. Jodha (1978) identifies a destructive process in India in which drought leads
to declines in productive assets, which then inhibits asset recovery before the next drought cycle.
Ahmed and others (2002) describes a similar process for pastoralists in the Horn of Africa and
Berhanu (2009) for Borana pastoralists in Ethiopia. But as Dercon (2004b) describes, the extent
to which assets can be used to smooth consumption is limited by post-shock collapses in terms of
trade and because of asset lumpiness.
4
That is, the benefits of selling assets after a shock are
limited because the market is flooded by many households employing this same strategy to
smooth consumption. The lumpiness of assets the inability to sell part of a bullock, for
instance, is an additional challenge, as households may face a choice between selling the entirety
of a productive asset and selling nothing at all.
Little and others (2004) provides evidence from South Wollo and Oromiya, Ethiopia that drought
is particularly harmful to the assets of poor households: the two poorest (in livestock) quintiles of
households in the study area lost approximately 80% and 60% of the assets, respectively, due to
the 1999-2000 drought compared to a 6% loss by the wealthiest quartile. While poorer
households and female-headed households recover more quickly, Little and others (2004)
explains that many poor households have reached a type of low-level poverty equilibrium
where they move among very low levels of asset ownership and, despite intermittent droughts,
return to their pre-existing asset levels. (Little and others (2004) at p.3). Quisumbing, Kumar,
and Behrman (2012) outlines differences in how drought and other weather shocks affect assets
controlled by men and women within the household.
Several studies provide evidence of a different process known as asset smoothing, in which poor
agents respond to shocks by destabilizing consumption in order to defend or smooth their asset
base. (Zimmerman and Carter 2003 at p.234). Asset smoothing is likely the result of the asset
indivisibility or lumpiness described above (households cannot sell part of a bullock) and
imperfect or non-existent credit markets. Both of these factors mean that households may be

3
Christiaensen and Sarris (2007) notes that the lack of impact in Ruvuma is related to the low incidence of drought
shocks in Ruvuma in 2003, consistent with more secure rainfall patterns. (Christiaensen and Sarris 2007 at p.3)
4
Fafchamps, Udry, and Czukas (1998) questions the significance of livestocks role in consumption smoothing,
finding that sales of livestock in the West African semi-arid tropics compensate for at most thirty percent of income
shortfalls during severe drought.
10

unable to maintain current consumption by selling off some of their current assets, perhaps
calculating that these assets are necessary for future productive activities, or by borrowing
money (against these assets). In rural Burkina Faso, for instance, Kazianga and Udry (2006)
finds that households sacrifice consumption during drought to save livestock. Carter and others
(2007) provides some evidence of asset smoothing among the lowest wealth households during
drought in Ethiopia.
Similar to health shocks, rainfall shocks can have adverse and long-term impacts on human
capital. Most (though not all) of the evidence suggests that drought is most harmful to younger
children (under the age of 2 or 3), suggesting a critical period during which nutritional
deprivation has particularly harmful (long-term) effects. The severity of the human capital
impacts of drought are likely context-specific (Alderman 2010). There is evidence that rainfall
shocks have more severe impacts on the health of women and girls than on that of men and boys,
perhaps because of bias in how household resources are allocated (Maccini and Yang 2009).
Still, adverse impacts on height, weight, survival, and mental health are apparent across genders.
Studying children aged 0 to 15 in Cte dIvoire, Jensen (2000) finds that adverse weather shocks
lead to increased malnutrition and lower school enrollment rates.
5
However, the author is unable
to identify whether these effects persist. A handful of studies from Zimbabwe help distinguish
both the lasting effect of drought shocks and the critical period when exposure matters most.
Hoddinott and Kinsey (2001) finds evidence that exposure to drought between the ages of 12 and
24 months leads to a loss of growth between 1.5cm and 2cm, with the effect pronounced in
children of poorer households and of daughters of the household head. Exposure between 26 and
60 months has no apparent effect (see Hoddinott (2006) for a summary of these results). The
authors observe limited catch-up growth so that this growth faltering has a permanent effect.
(Hoddinott and Kinsey 2001 at p.410).
Exploring the long-term consequences of drought-induced child malnutrition further, Alderman,
Hoddinott, and Kinsey (2006) uses drought and civil war to investigate the long-term impact of
malnutrition experienced in early childhood (prior to age three) in rural Zimbabwe. The authors
find that drought and civil war are associated with worse pre-school nutrition, which translates
into lower height as a young adult, completion of fewer grades of school, and later school entry.
The authors calculate that the reduced schooling means a loss in lifetime earnings of
approximately 14%. Alderman, Hoogeveen, and Rossi (2009) finds similar negative impacts
from drought in the Kagera region of Tanzania, though the effect is significantly smaller and not
always significant, prompting Alderman (2010) to conclude that the marginal contribution of
drought to the total economic costs of malnutrition is likely context specific.
6
(Alderman 2010
at p.149S).
One recent study from India provides evidence that in utero drought shocks have long-run
impacts. Based on cognitive math and reading test scores, Shah and Millett Steinberg (2012)

5
Jensen (2000) uses children ages 0 to 10 when analyzing health outcomes and ages 7 to 15 when analyzing
educational outcomes.
6
In fact, Alderman (2010) suggests that the large effects observed in Alderman_2006 may be particularly large due
to the duration of the back-to-back droughts at the time of the baseline in Zimbabwe as well as the limited stock of
household assets. (Alderman 2010 at p.149S).
11

finds that the negative impacts of drought exposure on these test scores are greatest for in utero
exposure and disappear after age two. However, the authors also explore the possibility that
droughts have a beneficial impact on the human capital accumulation of older children. As
children grow up, the substitution effect between human capital investment and productive
activities becomes more important; a drought might make schooling attractive compared to
work. Indeed, the authors find that exposure to drought leads to improved test scores and school
attendance for children ages 5 to 16.
There is substantial evidence that the impacts of drought and rainfall shocks are not uniform
across gender. Rose (1999) finds that favorable rainfall shocks in rural India improve girls
likelihood of survival relative to that of boys. Hoddinott and Kinsey (2000) observes no impact
of drought in Zimbabwe on mens BMI, but a reduction among women, whose BMI does
recover quickly (see also Hoddinott (2006)). Assessing positive rainfall shocks as in Rose
(1999), Maccini and Yang (2009) shows an association in Indonesia between higher rainfall in
early-life (but not in utero) and higher educational outcomes, an improved score on an asset
index, improved self-reported health outcomes, and greater height. The results hold for women,
but not for men.
Other impacts of drought and rainfall shocks include increased levels of the stress hormone
cortisol (Haushofer, de Laat, and Chemin 2012) and increases in witch murders (Miguel 2005).
Agricultural and crop shocks are closely related to, and quite frequently the product of, drought
and rainfall shocks. Evidence, albeit limited, suggests that households are generally able to
smooth consumption after such shocks, though considerable evidence suggests that there are
long-term negative effects on human capital.
Kochar (1995) explores the impact of crop shocks on consumption in ICRISAT villages of India
and finds that households compensate for crop losses with increased labor income. For this
reason, Kochar (1995) posits that demographic shocks the number, type, and wellbeing of
household members may be worse for farm households than crop income shocks. Porter (2012)
investigates the capacity of households in Ethiopia to smooth consumption in response to a
variety of shocks. While extreme rainfall shocks render households unable to smooth
consumption, idiosyncratic crop (and livestock) shocks do not harm consumption as households
make due with non-agricultural income.
Several studies establish long-run impacts to crop shocks. Yamano, Alderman, and Christiaensen
(2005) finds that community-level crop damage in Ethiopia leads to growth loss in children aged
6 to 24 months. Similarly, Banerjee (2007) identifies long-term height loss from a Phylloxera
insect attack, which caused major income losses in 19
th
Century France, which the authors argue
was a developing country. Infant mortality, life expectancy, and morbidity at age 20 were
unaffected. Akresh, Verwimp, and Bundervoet (2011) studies crop shocks in Rwanda and finds a
similar negative impact on height. But the impact is not uniform: the effect is limited to girls
born during a crop failure, especially those in poor households. The authors note that This result
is consistent with a gender discrimination story in which households reallocate scarce resources
toward boys, and therefore only girls suffer the negative impact of being born during the crop
failure in the affected regions (Akresh, Verwimp, and Bundervoet 2011 at p.806). They do
12

acknowledge, however, that other explanations are possible. Finally, De Vreyer, Guilbert, and
Mespl-Somps (2012) analyzes the effects of a locust plague in Mali and identifies significant
negative impacts on education for rural households. School enrollment declined more for boys
than for girls, both boys and girls obtained fewer years of education though girls obtained even
less, and fewer boys and girls completed primary school though in this case the effect was larger
for boys. Beegle and others (2008) finds that crop and rainfall shocks lead to less school
attainment for boys but not for girls (though girls are found to marry earlier): a one standard
deviation increase in child labor leads to a one year loss of schooling 10 years later.
Climate change will play a significant role in how droughts and rainfall patterns impact
households. That climate shocks will increase in frequency and severity due to climate change is
well known. But shifting climactic patterns will also necessitate adaptation to new growing
seasons, different rainfall patterns, and newly suitable and unsuitable crops. Baez, de la Fuente,
and Sanots (2010) notes that trends in climate shocks may reduce [rural] households ability to
detect and appropriately evaluate weather-related risk ex ante, thereby widening the gap between
optimal and actual adaptive behaviors. (Baez, de la Fuente, and Sanots 2010 at p.5)
Famine
Drought has been a cause of famine throughout history ( Grda 2009). But several
characteristics distinguish drought from rainfall shocks. As Currie and Vogl (2012) describe,
famine influences income and food prices while (localized) rainfall shocks only reduce income;
famines are usually more severe than such shocks, particularly in terms of mortality; and
famines, unlike rainfall shocks, are often associated with political failures.
During famine, households struggle to maintain current consumption without jeopardizing future
income (Corbett 1988). But the gravity, diversity, and longevity of famines impacts on human
capital, which can extend a generation beyond famine exposure, are particularly striking.
Famines sustained impacts are seen in both the short term in higher mortality rates and in the
long term in increased risk of disease, mental health problems, and shorter stature. While studies
vary in the exposure period studied, impacts are seen from exposure during the first trimester in
utero through early childhood. In some cases, impacts vary by gender. Positive selection the
healthiest individuals are the most likely to survive famine is a serious concern in studying the
impact of famine (Mu and Zhang 2011). As Mu and Zhang (2011) describes, The mortality
selection hypothesis thus predicts a positive link between early life exposure to severe shocks
and later health outcomes. (Mu and Zhang 2011 at p.92). This somewhat counterintuitive
observation suggests that the impact of severe events such as famines can be (perhaps
significantly) underestimated.
Investigating the 1974-1975 famine in Bangladesh, which resulted from monsoon flooding,
Razzaque and others (1990) finds that mortality was higher among a cohort of children born
during the famine until age 2 and among a cohort conceived during the famine until age 1. The
effect on children born during the famine was stronger for the poor than for the better-off.
In utero and early-childhood exposure to famine seems to have longer-term impacts on adult
health, although there is some evidence to the contrary. Research on the starvation that ensued
13

from the German siege of Leningrad and on the Finnish famine of 1866-1868 does not observe a
negative impact on adult outcomes such as cardiac conditions and longevity (See the references
cited in Neelsen and Stratmann (2011).)
Quite a few other studies do identify long-run negative impacts of famine on health. Several
investigate the long-term consequences of prenatal exposure to the 1944-1945 Dutch famine in
Nazi-occupied areas of the Netherlands and identify an association with increased glucose
resistance or intolerance, higher rates of obesity, worse self-reported health, coronary heart
disease, and increased risk of breast cancer among women, though not with reduced fertility in
women (See references in Neelsen and Stratmann (2011), Lumey and others (2007), and
Roseboom, de Rooij, and Painter (2006). See also Stein and others (1975) as cited in Akresh,
Verwimp, and Bundervoet (2011) and Lumey and others (1997)). Lumey (1992) even finds
intergenerational negative effects of famine on birthweight. Stein, Susser, and Saenger (1972) in
contrast, does not find an impact on adult mental performance (Stein, Susser, and Saenger 1972
as cited in Ampaabeng and Tan 2012)
Similar results have been found for the Great Famine in China, which occurred between 1959
and 1961 and resulted in between 15 and 30 million excess deaths.
7
In addition to worse health
outcomes such as overweight the studies, which investigate exposure both in utero and in early
childhood, find a relationship between famine exposure and reduced height and weight in
adulthood (Luo, Mu, and Zhang 2006; Yang and others 2008; Chen and Zhou 2007; Meng and
Qian 2009; Grgens, Meng, and Vaithianathan 2012). Selection is a particular concern when
analyzing the long-term impact of famines because, as Grgens, Meng, and Vaithianathan (2012)
describes, If children who in the absence of famine would grow up to be relatively short are less
likely to survive a famine, then the survivors may be taller than everything else being equal.
(Grgens, Meng, and Vaithianathan 2012 at p.99). In fact, selection may explain the null results
found in Stein, Susser, and Saenger (1972) and in the studies of the German siege on Leningrad
and the Finnish famine (Neelsen and Stratmann 2011; Ampaabeng and Tan 2012)
Meng and Qian (2009) tries to overcome this selection problem by analyzing the impact of
famine exposure on the 90
th
percentile of height and weight outcomes. The long-term impacts
remain: exposure to the Great Famine in utero led to reductions of 1.7% in height and 2.3% in
weight for individuals in the 90
th
percentile of the distribution of outcomes. The effects are
similarly negative for exposure in early childhood. Grgens, Meng, and Vaithianathan (2012)
attempts to overcome the selection problem by comparing affected and unaffected cohorts and
finds a long-term negative impact on height. Chen and Zhou (2007) uses a difference-in-
differences approach that exploits regional variation in mortality rates and again finds a negative
impact on height. Though not accounting for selection, Porter (2009) observes similar
consequences of the 1984 famine in Ethiopia. Luo, Mu, and Zhang (2006), Yang and others
(2008), and Kagy (2012) provide evidence of differential effects across gender.
Several studies of the Dutch famine identify an association between prenatal famine exposure
and increased risk in adulthood of mental health problems, such as antisocial personality disorder
and schizophrenia (See references in Neelsen and Stratmann (2011), Neugebauer, Hoek, and

7
Footnote 1 in Chen and Zhou (2007) describes controversy about estimates of the population lost.
14

Susser (1999), Brown and others (2000), and Hulshoff Pol and others 2000). A relationship
between famine exposure and increased risk of schizophrenia was also observed by Song, Wang,
and Hu (2009) in urban areas and by St. Clair and others (2011).
Famine also has adverse impacts on educational, labor, and social outcomes for individuals
exposed both in utero and in early childhood. Famine exposure in utero or in early childhood is
associated with a greater risk of being illiterate, lower educational attainment, lower cognitive
ability, inferior labor market outcomes, and reduced marital attractiveness (Almond and others
2007; Brandt, Siow, and Vogel 2008; Meng and Qian 2009; Chen and Zhou 2007). Neelsen and
Stratmann (2011), for instance, studies in utero and early childhood exposure to the 1941-1942
Greek famine and finds a reduced likelihood of upper secondary schooling and fewer years of
education, along with decreases in socioeconomic status. Ampaabeng and Tan (2012) is able to
use IQ scores as a direct measure of the long-term impact of the 1983-1984 famine in Ghana on
cognitive development: for children exposed between ages zero and 2, IQ decreases almost 7
percent for a one-standard deviation increase in the authors measure of famine intensity.
In several studies, these effects on health and education are only observed for women (Shi 2011
and Mu and Zhang 2011 for China; Kagy 2012 for Bangladesh). Mu and Zhang (2011) finds
evidence that this is the result of positive selection (improving mens outcomes) for health and
the culture of son preference (worsening womens outcomes) for illiteracy. As Mu and Zhang
(2011) points out, Biologically, mortality selection is not gender-neutral.(Mu and Zhang 2011
at pp.92-93). This implies, and Mu and Zhang (2011) corroborates, that males exposed to famine
in utero should have better health outcomes as adults. A preference for male children would
operate in the same direction, improving mens outcomes and worsening womens.
Natural disasters
Natural disasters not only destroy property and livelihoods but have long-term impacts on human
capital, as well. Nutrition, education, health, and income generation are all affected. The impacts
vary in size but are invariably negative (Baez, de la Fuente, and Santos 2010). Climate change
will likely exacerbate these negative effects, particularly for poor households (Baez, de la
Fuente, and Sanots 2010). In a cross-country study of natural disasters between 1981 and 2002,
Neumayer and Plmper (2007) finds that womens life expectancy is lowered by natural
disasters more than that of men.
8

Hurricanes, tropical storms, and typhoons
The impacts of hurricanes, tropical storms, and typhoons are varied. But there is evidence that
these storms have detrimental long-term effects on schooling. Short-term adverse impacts on the
mental health of children and adults are particularly well-documented and vary with the degree
of exposure. There is evidence that these adverse impacts decline over time (van Griensven and
others 2006; de Mel, McKenzie, and Woodruff 2008; Friedman and Thomas 2008)

8
Neumayer and Plmper (2007) includes several natural disasters for example, landslides that are not discussed
in this review. The paper also treats several shocks for example, drought and insect infestations as natural
disasters which are treated separately in this review.
15

Hurricane Mitch, a severe storm which hit Nicaragua and Honduras hard in 1998, is frequently
studied. Premand (2010) finds very limited evidence of a negative impact of Hurricane Mitch on
consumption growth in Nicaragua among affected households in the short term and no impact
over the longer term. The negative effect is limited to the idiosyncratic effects of events
associated with the hurricane such as floods and displacement. But as Premand (2010) notes, this
result does not preclude ill effects from coping mechanisms deployed to maintain consumption.
Indeed, Baez and Santos (2007) documents reduced investment in childrens human capital in
Nicaragua three years after Hurricane Mitch, noting little change to adult nutritional status and
consumption. In particular, children in the area affected by the Hurricane were four times more
likely to be undernourished after the storm and sick children in affected areas were 30 percent
less likely to be taken for medical consultation. School enrollment was not affected, but there
was an increase of 8.5 percentage points in the labor force participation of children in affected
areas and the hurricane was associated with a doubling in the proportion of children enrolled in
school and working at the same time. Similar results are found for the impact of Tropical Storm
Stan in Guatemala. Bustelo (2011) observes that the storm increased the likelihood of working
among children ages 13 to 15 (but not ages 7 to 12), though school participation decreased only
for boys, and calculates an associated decrease in long-run wages of 19.8 percent.
In Honduras, Morris and others (2002) documents income reductions, asset depletions, and
unanticipated costs among the rural poor as a result of Hurricane Mitch. While the poorest
households were less likely to suffer mostly because they already had less when they did lose
assets these losses were much more severe than among the wealthiest households. Carter and
others (2007) provides evidence of a similar effect, showing that wealthier households in
Honduras recovered from Hurricane Mitch more quickly than the lowest wealth groups. Asset
losses among these households were of longer duration and felt much more acutely. (Carter
2007 at p.852). In Sri Lanka, Becchetti and Castriota (2010) compares a group of microfinance
borrowers affected by the 2004 tsunami and a group that was unaffected and observes a
reduction of 40 percent of real income in the treatment group compared to the control.
The mental health consequences of hurricanes have been studied extensively, with a focus on the
risk for Post-Traumatic Stress Disorder. In the United States, exposure to Hurricane Hugo was
associated with distress and PTSD symptoms several months and even a year after the storm
(Belter, Dunn, and Jeney 1991; Lonigan and others 1991; Lonigan and others 1994; Garrison and
others 1993; Shannon and others 1994). The severity of symptoms generally exhibited a dose-
response relationship: symptoms worsen as exposure increases. In most cases, a higher rate of
symptoms is found in females (Lonigan and others 1991; Lonigan and others 1994; Shannon and
others 1994). Shannon and others (1994) suggests that this differential effect is due to differences
in the risk of exposure, reporting biases, and differences in the risk of developing posttraumatic
symptoms. Posttraumatic symptomatology also arose after Hurricane Andrew (Shaw and others
1995; Vernberg and others 1996).
Outside of the United States, results are broadly similar. Hurricane Mitch was found to result in
PTSD symptoms (adults) and stress and depressive reactions (adolescents) in Nicaragua. Again,
symptom severity appeared to be related to severity of exposure (Caldera and others 2001;
Goenjian and others 2001). Caldera and others 2001 found an association between PTSD
symptoms and the death of a relative, the destruction of a house, female sex, previous mental
16

health problems, and illiteracy. In Thailand, the late-2004 Indian Ocean tsunami and events
related to it were associated with PTSD symptoms in children that persisted nine months after
the incident and with elevated rates of PTSD symptoms, anxiety, and depression in adults
(Thienkrua and others 2006; van Griensven and others 2006). Research on the mental health
effects of the same tsunami among owners of microenterprises in Sri Lanka found degree of
exposure, gender, and non-Sinhalese minority status to be risk factors for a mental health
response (de Mel, McKenzie, and Woodruff 2008). Becchetti and Castriota (2010) finds that the
tsunami had a large, negative impact on measures of life satisfaction of Sri Lankan microfinance
borrowers.
Significantly, Frankenberg, Friedman, and Thomas (2009) shows that in Indonesia post-
traumatic stress reactions associated with the 2004 Indian Ocean tsunami were not related to
social and economic welfare outcomes including physical health, widowhood, work, income,
and household wealth two to four years later. This leads the authors to conclude that the
absence of long run consequences of initial [posttraumatic stress reactions] among those
outcomes investigated suggests that scarce relief resources in a disasters immediate aftermath
are best channeled towards traditional relief activities and not early-stage mental health
interventions. (Frankenberg, Friedman, and Thoams 2009 at pp.29-30)
Earthquakes
Earthquakes have adverse consequences on poverty, long-run human capital accumulation, and
mental health. A dose-response effect is particularly apparent in the health consequences of
earthquakes.
Studying two powerful earthquakes in El Salvador in 2001, Baez and Santos (2008) finds an
association between more-severe ground shaking and a reduction in household income of one
third. Investigating the impact of an earthquake in Peru in 2007, Lucchetti (2011) finds increases
in objective and subjective measures of poverty.
Exploring the human capital effects of the 2001 El Salvadorian earthquakes, Santos (2007)
determines that the significant exposure to the quakes made children more likely to work outside
the home (participation increased 10 percentage points) and less likely to attend school (the
probability of enrollment fell 6 percentage points). Putting these results together with their
findings, Baez and Santos (2008) concludes that The evidence for El Salvador indicates,
therefore, that sufficiently large natural disasters are likely to have a long term and inter-
generational impact on poverty, unless public policy plays both a prevention and mitigation
role. (Baez and Santos 2008 at pp.5-6).
Hermida (2010) provides additional evidence of the importance of degree of exposure for the
severity of earthquake impact. Each standard deviation increase in the intensity of an earthquake
that struck Guatemala in 1976 reduced schooling by 0.2 years for children in early childhood and
0.4 years for school-age children. Hermida (2010) finds evidence of differential impacts by
gender, with school-age boys experiencing no reduction in schooling in contrast to the half year
lost by girls. In Colombia, a 1999 earthquake reduced nutrition, measured as height-for-age Z-
score, and schooling immediately after the earthquake, particularly in the most affected area.
17

Effects were still present six years later, especially for boys, but seem to have been mitigated by
relief aid. Estimations of the long-run effects on lifetime earnings suggest that the human capital
impacts were economically meaningful (Bustelo, Arends-Kuenning, and Lucchetti 2012)
Earthquakes are also associated with negative health impacts. Tan and others (2009) finds that
the severe 2008 earthquake in southwestern China had an effect on several birth outcomes, such
as birthweight, the rate of birth defect, and the rate of preterm births, though no effect was found
for sex ratio at birth, birth length, and gestation length. The negative impacts of earthquakes,
particularly severe ones, on mental health are particularly well documented. A destructive
earthquake which occurred in Armenia in late 1988 is a frequent subject of study. PTSD
symptoms were found among children, young adults, and the elderly and became more severe as
exposure to the earthquake and distance to its epicenter increased (Pynoos and others 1993,
Goenjian and others 1994, Goenjian and others 1995, Najarian and others 1996). Chen and
others (2002) finds that the 1999 Chi-Chi Earthquake in Taiwan led to posttraumatic stress
reactions that follow a dose effect. Effects also differed across gender and age, with more
posttraumatic stress symptoms reported by younger children and females. Degree of exposure
was an important determinant of the severity of posttraumatic stress reactions in children and
adolescents due to a 1999 earthquake in Greece (Roussos and others 2005). Interestingly,
Vahaboglu and others (2001) discusses emotional instability as a possible cause of the increase
in diarrheal disease found after a 1999 earthquake in Turkey. The authors describe that first,
emotional instability could cause diarrhea and might be reason for some of the cases; second,
deep depression could make people less immune and more susceptible to diseases. (Vahaboglu
and others 2001 at p.1389).
Floods
Floods, identified by the depth of water covering an area or the extent of a region that is under
water and a result of natural (excessive rainfall or tides) as well as man-made (infrastructure
failures), have a wide range of negative health impacts, both physical and mental (Ahern and
others 2005). There is some evidence that floods create challenging nutritional environments for
children, which have long-term consequences. There is some evidence that flooding has a
negative impact of flooding on wages, which varies with severity of exposure.
Ahern and others (2005) reviews the impacts of floods on health, paying particular attention to
mortality, injuries, disease, and mental health. The authors find that mortality depends on flood
characteristics (for instance, the speed of onset), that data on nonfatal injuries is sparse, and that
a link to mental health seems to be present, though research is limited. They also find evidence
of a relationship between flooding and increased incidence of fecal-oral and rodent-borne
diseases, but caution that flooding has an ambiguous effect on vector-borne disease because
breeding sites can either be washed away or created by floodwaters. However, Ahern and others
(2005) warns of a limited evidence base, the high-income bias of the available studies, and the
variation in the severity of floods (Ahern and others 2005 at p.43)
delNinno and others (2001) reviews the large-scale 1998 flooding in Bangladesh and finds
negative impacts on food security (with food consumption and calorie intake falling), on
household access to infrastructure such as safe water, and on health, such as illness, wasting, and
18

stunting. del Ninno and Lundberg (2005) establishes that children exposed to the 1998 flooding
were smaller than unexposed children and did not catch up to their peers after the flood.
Banerjee (2007) investigates the impact of flooding on agricultural wage rates in Bangladesh
and, though identifying a beneficial long-run impact of normal flooding, finds that agricultural
wages decrease in flood months, decrease more in districts that are less flood-prone, and decline
more when floods are extreme. Focusing specifically on the extreme 1998 flooding in
Bangladesh, Mueller and Quisumbing (2010) also finds wage decreases. Wages declined 4
percent for every foot the flood deviated from normal flood depth in agricultural markets (an
effect which stabilizes over time) and about 7 percent in nonagricultural markets (an effect
which grows over time). The negative impact on wages was identifiable five-and-a-half years
after the flood but not a year after the flood.
Civil and political conflict and war
Conflict can have serious consequences for human capital, particularly childrens health and
schooling, which are likely translated into welfare losses in the long-run (See de Walque (2011)
for a review). However, there is some evidence that certain types of violence do not have longer-
term impacts. Miguel and Roland (2011), for instance, investigates the effect of U.S. bombing
during the Vietnam War and finds no evidence 25 years later of an impact on local poverty rates,
consumption levels, infrastructure, literacy, or population density.
Still, substantial research suggests that conflict has important long-term impacts on health,
education, and long-run earnings. Minoiu and Shemyakina (2012) investigates how the civil
conflict in Cote dIvoire between 2002 and 2007 affected children young or in utero during the
conflict when they were between the ages of 6 and 60 months (5 years). The researchers find that
children in regions which the conflict affected more had height-for-age Z-scores 0.2-0.4 standard
deviations less than children in regions which the conflict affected less. Lengthier exposure to
the conflict caused a larger decline. The negative impact on health seems to have resulted from
household victimization, including the loss of productive assets and employment, destruction of
property, and a decline in household revenues.
Akresh, Verwimp, and Bundervoet (2011) finds a similar result for children born during civil
war in Rwanda in the early 1990s. The height-for-age Z-scores of children under the age of 5
who were born during the conflict in the conflict region are more than one standard deviation
lower. The negative effect is felt by both girls and boys. Minoiu and Shemyakina (2012) also
found no difference by gender. A similar negative impact on height-for-age Z-scores has been
identified after the 1998-2000 Eritrea-Ethiopia war: Z-scores of children under five who were
born during the conflict in the conflict region are 0.42 standard deviations lower and who were
born before the conflict are a statistically indistinguishable 0.34 standard deviations lower
(Akresh, Lucchetti, and Thirumurthy 2012). Children under the age of five who were born before
or during the Burundi civil war also had lower height-for-age Z-scores: each month of exposure
to conflict decreased the Z-score by 0.047 standard deviations with average exposure resulting in
a reduction of one standard deviation (Bundervoet, Verwimp, and Akresh 2009).
19

Studying an influx of refugees into Tanzania that resulted from genocides in Burundi and
Rwanda, Baez (2011) documents a range of both shorter- and longer-term negative impacts on
Tanzanian children. A little more than a year after the genocides, exposed children had height-
for-age Z-scores 0.3 standard deviations lower, the incidence of infectious disease increased
between 15 and 20 percentage points, and the under-five mortality rate increased 7 percentage
points.
9
Ten years post-genocide, negative impacts were still observed among exposed children:
early-adulthood height was 1.2 percent lower, schooling was 7.1 percent lower, and literacy was
8.6 percent lower. Alderman, Hoddinott, and Kinsey (2006) identifies a negative impact of
exposure of children under age three to civil war in Zimbabwe on their height-for-age Z-scores
as preschoolers, and then links reduced pre-school height-for-age to lower height, fewer grades
completed, and later school entry in adolescence.
Several studies build on this evidence that conflict reduces educational attainment. Merrouche
(2006) finds that exposure to land mines in Cambodia reduces educational attainment by 0.4
years, though no effect on earnings is observed and destruction of physical capital rather than
health or educational quality effects is proposed as the mechanism. de Walque (2006)
corroborates this finding, documenting that the school system collapsed in Cambodia under the
Khmer Rouge in the late 1970s. Len (2010) finds that exposure in early childhood to violence
associated with civil conflict in Peru reduced educational attainment by 0.21 years in adulthood,
though catch-up was possible for children exposed after they began school. The effect was
stronger for women. Unlike Merrouche (2006), Len (2010) finds evidence that health, rather
than a supply shock, is responsible for the reduction. Finally, Akresh and de Walque (2011) finds
that the Rwandan genocide reduced educational achievement by nearly a half-year and
Shemyakina (2011) that the 1992-1998 conflict in Tajikistan reduced the likelihood that school-
age girls would complete mandatory schooling and that girls would be enrolled in school (effects
were stronger for older girls and similar effects were not found for boys). Ichino and Winter-
Ebmer (2004) offers evidence in line with these studies for World War II.
Grimard and Laszlo (2010) and Akresh and others (2012) both investigate the effects of conflict
on health in adulthood. Exposure to civil conflict in Peru in the 1980s and 1990s prior to birth
(but not later) had negative impacts on womens height and exposure at age two had negative
impacts on womens anemia.
10
(Grimard and Laszlo 2010). Exposure as children and adolescents
to the Nigerian civil war in the late 1960s was found to have a negative impact on the height of
women 30 to 40 years after the conflict. Significantly, exposure during adolescence had a larger
impact than exposure earlier in life (Akresh and others 2012). Identifying another potential long-
term health consequence of conflict, Dupas and Robinson (2012) shows that political and civil
conflict in Kenya not only reduced income and consumption but resulted in female providers of
transactional sex performing higher-risk sex in an effort to make up for the income reduction.
The authors argue that such risky sex could have long-term effects on the spread of HIV and
other STIs. (Dupas and Robinson 2012 at p.327)

9
Height-for-age Z-score and infectious diseases were measured for children under age four. (Baez 2011)
10
Grimard and Laszlo (2010) finds mixed results for the impact on BMI and less evidence of an impact on domestic
abuse.
20

In a review of the impact of conflict and other shocks, de Walque (2011) describes that The
consequences of these shocks are likely to persist even into adulthoodand will have a long-run
welfare impact on individuals as well as on society, through an adverse effect on future adult
wages and productivity. (de Walque 2011 at p.108). Several of the studies cited above estimate
the likely impact on wages of the reduced stature induced by conflict. Akresh, Lucchetti, and
Thirumurthy (2012) estimates that the Eritrea-Ethiopia war led to a decline in wages of 4.3
percent for exposed children while Bundervoet, Verwimp, and Akresh (2009) estimates a decline
of 20.5 percent from the Burundi civil war (See also Ichino and Winter-Ebmer (2004) for World
War II.)
Food price fluctuations and macroeconomic shocks
The impacts of macroeconomic shocks are quite heterogeneous, varying significantly by
household wealth and across and within countries. Often, research investigates macroeconomic
shocks that involve a significant decline in a nations economic output. Food price shocks, in
particular, have diverse consequences because they benefit households and individuals who are
net sellers while harming net buyers.
Ravallion (1990), for example, incorporates the effect of an increase in the price of food on the
agricultural wage rate into an analysis of rural welfare in Bangladesh. He shows that the likely
effect of such a price increase in the short run is a welfare gain for the rural rich and a welfare
loss for the rural poor. But he also notes that in the long run poor households seem to be
unaffected and, more interestingly, that the poorest households are more likely to benefit from
the price increase than less poor households. Unlike the results in partial equilibrium, the
welfare loss will be mitigated by the responses of wages, and, as noted earlier, the share of
income from wage labour tends to increase as income falls...[T]he long-run welfare effect of a
foodgrain price increase is more likely to be positive for the poorest households.
(Ravallion_1990 at p.583). A 10 percent price increase should lead to a gain of 0.75 percent of
income for the poorest without a significant gain among the least poor.
Evidence from Pakistan, Vietnam, Afghanistan, Brazil, and Indonesia further demonstrates the
heterogeneity in the impacts of food price shocks. In Pakistan, Friedman, Hong, and Hou (2011)
finds that the 2008 food price crisis during which the price of domestic wheat rose 106%, of
other staple foods rose between 20% and 120% and of nonfood prices rose 17% on average led
to a reduction in household caloric availability of 8 percent, but that rural households were better
protected than urban households. Vu and Glewwe (2011) shows that food price increases in
Vietnam in 2007 and 2008 prices increased 18.9% in 2007 and 32.7% between January and
September of 2008 increased the welfare of the average household. However, the welfare of
most households still declined because the welfare gain of net sellers was larger than the welfare
loss of net purchasers. While the welfare of the average household increased 9.2 percent, poverty
also increased 1.1 percentage points. Still, middle-income households benefit more than poor
households in rural areas (as do the poor in urban areas). DSouza and Jolliffe (2012) reports that
food price increases in Afghanistan in 2008 where the urban food CPI rose almost 60 percent
and the non-food CPI rose 10 percent reduced food consumption less than calories, as
households traded off quality for quantity of calories in response to declining purchasing power
and relative price changes. (DSouza and Jolliffe 2011 at p.284). Consumption declined more
21

significantly for urban households and households without agricultural land. Taking into account
the effects of food price increases in 2007 and 2008 in Brazil where cereals prices increased
30.2 percent and meat prices increased 20.3 percent on average on income, expenditure, and
government transfer programs, Ferreira and others (2013) finds that middle-income groups were
more affected than both poor and rich groups. Extreme poverty increased, though higher incomes
from higher food prices mitigated the increase. Finally, investigating the impact of the 2007-
2008 food price increases in Indonesia, Nose and Yamauchi (2012) provides evidence that the
shock generally made farmers better off but that wealthier farmers increased investment in
response to the price increase while poorer farmers increased consumption.
Looking at cross-country evidence from nine low-income countries
11
, Ivanic and Martin (2008)
finds that food price increases of the type experienced between 2005 and 2007 generally increase
poverty rates, though in Peru and Vietnam poverty rates declined primarily because of reductions
in rural poverty. Robles and Torero (2010) focus on the impact of higher food prices between
2006 and 2008 in Guatemala, Honduras, Nicaragua, and Peru. Modeling a price shock of 10
percent across the countries, Robles and Torero (2010) shows the price increase affects both
urban and rural households negatively, with poverty rates increasing approximately one
percentage point in Guatemala, Honduras, and Peru and approximately four percentage points in
Nicaragua. Poor households tended to be made poorer by the food price shock, presumably as
the price increases eat into the budgets of more households than those which benefit from the
price increases as producers.
In an overview of the shorter-term distributional effects of macroeconomic shocks on OECD
countries, Ahrend, Arnold, and Moeser (2011) notes that individuals with lower income, younger
people, and highly-leveraged households are particularly at risk from macro shocks. High-
income individuals seem to have the most to lose from financial crises and older people from
fiscal consolidations. Ahrend, Arnold, and Moeser (2011) argues that institutions have important
consequences for these distributional effects.
A small selection of studies of the economic crisis that began in Indonesia in late 1997 reveals
that economic crises can have serious short-term effects but that recovery is possible. Indonesias
real GDP fell 13% in 1998 and food prices spiked as the exchange rate depreciated (Strauss and
others 2004). Suryahadi and Sumarto (2001) finds that the crisis increased poverty substantially
by 1999, especially due to an increase in chronic poverty. Frankenberg, Smith, and Thomas 2003
looks deeper into how Indonesian households responded immediately after the economic crisis
and tells a more nuanced story in which those associated with export and food production benefit
while those associated with services and nontradeables production lose out: For some, the crisis
has been devastating; for others it has brought new opportunities. (Frankenberg, Smith, and
Thomas 2003 at p.318). The authors note strategies adopted by households in response to the
crisis, including increases in labor supply, changes in living arrangements, and reductions in
spending on goods such as clothing but maintenance of spending on food. Incorporating a more
recent wave of the Indonesian Family Life Survey employed by Frankenberg, Smith, and
Thomas (2003), Strauss and others 2004 finds that by 2000 individuals do not appear to be
substantially worse off compared to immediately before the crisis in late 1997, in terms of

11
The nine countries are Bolivia, Cambodia, Madagascar, Malawi, Nicaragua, Pakistan, Peru, Vietnam, and Zambia.
22

various dimensions of their standard of living. (Strauss and others 2004 at p.386). Still, Strauss
and others (2004) admits that this masks an interim period in which poverty rates spiked, as
Suryahadi and Sumarto (2001) notes, and in which per capita expenditure declined (Strauss and
others 2004 at p.386). Strauss and others (2004) also provides evidence that long-term health was
not affected but points out that increases in labor supply could represent a welfare-hurting
substitution away from time spent at home.
Friedman and Sturdy 2011 reviews the literature on the impact of economic crises on health
outcomes, focusing on early childhood development. The authors find significant, though not
universal, evidence that economic crises increase infant mortality and poor nutrition (e.g. low
birth weight, stunting, underweight, and wasting) and argue that evidence from other shocks
suggests that these negative effects could have long-term consequences. Baird, Friedman, and
Schady (2011), for example, studies 59 developing countries and finds that infant mortality
increases 0.24-0.40 per 1,000 children born for every one percent decline (from trend) in per
capita GDP. The authors report that deeper economic crises are worse and that female mortality
is significantly more sensitive to aggregate economic shocks than that of boys. (Baird,
Friedman, and Schady 2011 at p.848). As Friedman and Sturdy (2011) notes, increases in infant
mortality have been associated with economic crises in Mexico (Cutler and others 2002)
12
, Peru
(Paxson and Schady 2005), and India (Bhalotra 2010). However, studies such as Chay and
Greenstone (1999), which finds a reduction in infant deaths due to a decline in particulates
during the 1981-1982 recession, suggest that the relationship between economic crisis and infant
mortality reverses in developing countries (See Friedman and Sturdy (2011) for evidence of
similar results.)
On the other measures of health explored by Friedman and Sturdy (2011), Pongou, Salomon, and
Ezzati (2006) finds an increase in malnutrition among young children from economic crisis in
Cameroon, Hidrobo (2011) finds a medium-term negative impact of economic crisis in Ecuador
on height-for-age and vocabulary test scores, and Friedman and Thomas (2008) identifies a
negative and lasting effect of Indonesias financial crisis on measures of psychological distress,
particularly among the less educated and rural landless. Evidence about the health impacts of the
Indonesian economic crisis on health is less strong with Strauss and others (2004) and Cameron
(2001) suggesting that health was not negatively affected. However, Block and others (2004)
provides evidence that mothers buffered childrens caloric intake, resulting in increased
maternal wasting, and shows that changes in diet increased anemia in mothers and children
(Block and others 2004 at p.21)
The somewhat ambiguous effects of economic crises on health should perhaps not be surprising.
Ferreira and Schady (2009) shows that the effect of aggregate economic shocks on human capital
accumulation is theoretically ambiguous: aggregate shocks involve both an income effect
(households have fewer resources) and a substitution effect (schooling is less costly relative to
working). In fact, Ferreira and Schady (2009) review empirical evidence that the substitution
effect dominates in wealthier countries while the income effect dominates in poorer countries.
Education increases are generally documented in higher-income countries such as Argentina and

12
Cutler and others (2002) also finds that economic crisis in Mexico in 1995 increased mortality of the elderly.
Bhalotra (2010) also finds an effect only for girls.
23

Brazil but declines are generally found in lower-income countries such as Malawi and Cote
dIvoire. In Ferreira and Schady (2009)s judgment, the empirical evidence for their theoretical
presentation of the effects of economic shocks seems empirically clearer than that for schooling
outcomes. (Ferreira and Schady 2009 at p.170). Child health improves during economic shocks
in wealthier countries but declines during economic shocks in developing countries.
13

Finally, returning to the Indonesian economic crisis of the late 1990s, Wu, Borghans, and Dupay
(2008) provides evidence that households across the income spectrum (though not the wealthy)
continued to invest in their childrens education, but shifted to (potentially lower-quality)
educational alternatives, such as public instead of private schools and self-learning. Duryea and
Morales (2011) finds a similar shift in school type with attendance at public school more likely
in El Salvador due to the recent global financial crisis.
Are multiple shocks different?
Multiple shocks and chronic poverty
The concurrence of shocks (i.e. two shocks hitting nearly at once) and successive shocks (i.e. one
shock hitting after another) are a uniquely dangerous risk for households. Analyzing the impact
of such multiple shocks involves both methodological and data challenges. However, recent
research into the consequences of these shocks suggests that they are important to understanding
why some households are more vulnerable than others and why some households fall into and
remain in poverty. In particular, multiple shocks can lead households to deplete their assets to a
point from which it is very difficult to recover. Baulch (2011) notes this feature of multiple
shocks and highlights the importance of studies combining quantitative and qualitative empirical
approaches (so-called q-squared studies) to shed light on the impacts of multiple shocks.
Alderman (1996) analyzes successive transitory income shocks in rural Pakistan and finds that,
while a positive shock followed by a negative shock does not cause households to reduce
consumption, two successive negative shocks lead to lower consumption, no increase in debt,
and the sale of physical assets. Alderman (1996) argues that these results are consistent with a
stock out or a drawdown of liquid assets to essential [sic.] zero. (Alderman 1996 at p.359).
Relying more heavily on qualitative methods, Bird and Shinyekwa (2005) notes that in rural
Uganda A recurrent finding from the life-history interviews and focus-group discussions is that
the poorest had suffered recurrent and composite shocks and personal tragedies. (Bird and
Shinyekwa 2005 at p.82). Focusing on the concurrence of shocks rather than their
consecutiveness, Dercon and Porter (2011) notes a link between those in chronic poverty (and on
a downward trajectory) and the occurrence of both crop shocks and illness in Ethiopia, which
begins to unveil a picture of how multiple shocks can accumulate and push welfare down to a
point from which it is very difficult to recover. (Dercon and Porter (2011) at p.87)
Recurrent drought and the concurrence of dowry payments and other shocks illustrate the
harmful impacts of multiple shocks. Jodha (1975) emphasizes the irregularity of the drought

13
Note that Ferreira and Schady (2009) include weather shocks in their analysis of the health impacts of economic
shocks.
24

cycle in India, which means that farmers cannot always make up drought-caused losses between
periods of drought. Coupled with the collapse of prices as farmers scramble to sell assets in
drought years and price spikes as farmers scramble to buy assets in post-drought years, this
phenomenon can result in impoverishment.
14
Webb and Reardon (1992) further explains that
there is no close correlation between individual droughts and subsequent famines in part
because droughts pose a cumulative threat isolated occurrences are rarely dangerous. It is
when one drought-affected harvest follows another, straining longer-term coping strategies, that
crises become unmanageable. (Webb and Reardon 1992 at pp.235-236). Studying the 1999-
2000 drought in South Wollo and Oromiya, Ethiopia, Little and others (2006) describes that
Because droughts occur frequently, the poor face a situation where once they begin to re-build
their assets, the next drought wipes out the gains and recovery ensues again. (Little and others
2006 at p.3; see also Little, and others 2004). Berhanu (2009) documents the deterioration of
pastoral production in Ethiopia from natural shocks such as recurrent droughts, noting that
Recurrent shocks have a natural tendency to severely limit the [pastoral] systems asset
accumulation potential. (Berhanu 2009 at p.28)
While dowry payments on their own can lead to household vulnerability, their concurrence with
other negative events can be particularly damaging. As Davis (2007) explains, dowry payments
are a significant risk for poor households, one which is exacerbated because dowry payment
often corresponds with the time in the life-cycle when other drivers of impoverishment are also
likely to hit households hard, particularly the costs associated with illness and death of elderly
parents. (Davis 2007 at p.5; see also Davis 2009). Quisumbing (2011) provides some
quantitative evidence from Bangladesh that the combination of dowries and other shocks is an
important household risk, finding that the combination of dowry and wedding expenses and
expenses from illness makes moving out of poverty less likely.
15
This combination, Quisumbing
(2011) describes, makes households particularly vulnerable to falling further into poverty
because its stocks of both male- and female-controlled assets are depleted. (Quisumbing 2011 at
p.56)
Shocks: The Ex Ante Impacts of Risk
Income diversification vs. income skewing
In addition to the substantial ex-post consequences of shocks outlined above, risk also has ex-
ante impacts. Anticipating shocks, households sometimes engage in low-risk, low-return
activities. While affording them some protection from income variability, there is some evidence
that such strategies have detrimental consequences (Hoogeveen and others 2004)

14
Jodha (1975) writes Those [farmers] who fail to fully recoup their previous position during the good years
between two drought years (i.e. during one famine-cycle), may find it almost impossible to reach the earlier position
during the subsequent famine cycles. In such cases, further deterioration of the economic condition becomes almost
perpetual. (Jodha 1975 at p.1616)
15
The combination of dowry and wedding expenses and expenses from illness were also found to be negatively
associated with chronic poverty and positively associated with never having been poor, which Quisumbing (2011)
believes might be due to reporting bias.
25

As Dercon (2002) points out, in theory income diversification is a costless strategy to reduce risk
by combining two income streams that are not perfectly correlated. However, perhaps especially
for the poor, it is difficult to diversify the sources of income without reducing the level of mean
income. (Dercon 2002 at p.151). Income skewing reducing risk by engaging in lower-risk,
lower-return activities is the result (Dercon 2002)
Low-risk, low-return activities and other risk-driven behavior
Several studies provide evidence that households engage in low-return activities in order to
reduce their exposure to risk. Goland (1993) documents the use of field scattering or field
dispersion in Cuyo Cuyo, Peru as a risk reduction strategy. While yield suffers as a result of the
need for farmers to travel between fields, Goland (1993) reckons that the reduction in yield (7
percent) is not very large. Rosenzweig and Wolpin (1993) investigates the agricultural
investments of farmers in ICRISAT villages in India and finds that their portfolios sacrifice
profitability for less sensitivity to rainfall variability. The effects are substantial, particularly for
poorer farmers, implying distributional consequences, as well. Though Dercon and Krishnan
(1996), studying Tanzania and Ethiopia, emphasizes that risk is not the only reason why
households diversify income sources, Dercon (2008) notes other research from Tanzania
(Dercon 1996) showing that households with limited liquid assets (livestock) grow
proportionately more sweet potatoes, a low-return, low-risk crop. (Dercon 2008 at p.ii114).
Finally, Bandyopadhyay and Skoufias (2013) shows that in Bangladesh household members
diversify employment activities ex ante in response to rainfall variability, which in some cases
results in lower consumption.
Dercon and Christiaensen (2011) investigates the impact of the risk of reduced consumption on
the adoption of agricultural technology by farmers in rural Ethiopia. The possibility of failed
harvests resulting in reduced consumption is found to be an important factor preventing
farmers from using fertilizer. Finally, Jacobsen (2009) uses microcredit and microinsurance data
from rural Pakistan to show that microcredit clients insured against hospitalization and death are
more likely to take out successive loans with the same purpose. The authors argue that this is
evidence that individuals respond to a reduction in health risk by pursuing less diversified and
hence riskier income portfolios. (Jacobsen 2009 at p.935). The further implication is that the
reduction in diversification might result in higher returns.
Several other studies show the impacts of risk on household production and occupation decisions
(Kurosaki and Fafchamps 2002; Hill 2009; Menon 2009) and on fertility and education (Prtner
2008). Still, Kochar (1995) argues that in India the capacity of farm households to increase labor
supply after shocks hit reduces the need to resort to the depletion of assets or to costly ex ante
measures and may explain the limited empirical evidence in support of such responses (Kochar
1995 at p.159).
Are ex ante impacts economically meaningful?
At the household level, the impact of ex ante risk is nontrivial. Additionally, there is some
evidence that ex ante responses to risk have significant economy-wide impacts. Rosenzweig and
Wolpin (1993) calculates that decreasing weather risk by one standard deviation would increase
26

average profits by 35 percent for the poorest farmers in ICRISAT villages in India. Dercon
(1996) calculates that the wealthiest households in the Shinyanga region of Tanzania, who plant
less low-return and low-risk sweet potatoes, earn yields 25 percent higher per adult than the
poorest households (See also Dercon (2008)). Dercon and Christiaensen (2011)s study of
fertilizer adoption and application in Ethiopia observes that households with one standard
deviation higher predicted consumption when rainfall fails (implying less downside risk in
consumption) apply 16 percent more fertilizer.
Finally, Elbers, Gunning, and Kinsey (2007)s research on rural households in Zimbabwe
provides evidence that risk can have economy-wide ex ante impacts. The study shows that risk in
general reduces growth (measured by capital stock) and that two thirds of the reduction results
from ex ante effects. As Elbers, Gunning, and Kinsey (2007) notes, [for Zimbabwean
households] much of the expected impact [of shocks] is internalized as different investment
decisions. (Elbers, Gunning, and Kinsey 2007 at p.16)
However, other studies find a much smaller impact. Jalan and Ravallion (2001)s research on
precautionary wealth in rural China, for instance, finds that even if all income risk were
eliminated, the mean share of wealth held in liquid forms would fall only slightly, from 26.5% to
25.8%. (Jalan and Ravallion 2001 at p.46). That is, without income risk precautionary,
nonproductive wealth would decline less than one percentage point. Dercon and Krishnan (1996)
cautions that risk is part, but not the whole, story: In sum, the fact that rural households derive
their income from various sources cannot be ascribed merely to the goal of trading higher returns
for lower risk in incomes as is often assumed in the literature on coping strategies. Households
possess very different advantages for particular types of activities which in turn induces them to
take up such work; equally they might face entry constraints that prevent them from taking up
lucrative opportunities (Dercon and Krishnan 1996 at pp.869-70).
Risk and Poverty Traps
Ex post impacts and poverty traps
There is some evidence that negative shocks lead to poverty traps in which a households
optimal strategy is inconsistent with accumulation of productive assets sufficient to earn an
investible surplus greater than current consumption needs (Barrett 2005). However, several
studies find no evidence of such an impact. Yet even these tend to note that poorer households
recover more slowly from negative shocks than wealthier households.
Summarizing the results of literature showing that transient health shocks can have lasting
impacts, Dercon and Hoddinott (2004) writes that Shocks affecting health may then even be a
cause for a form of poverty trap: a permanently lower equilibrium income stream in the long-run
following a negative shock, making previously feasible outcomes impossible. (Dercon and
Hoddinott 2004 at pp.2-3). Carter and others (2007) investigates the longer-term impacts of
Hurricane Mitch in Honduras and drought in Ethiopia between 1998 and 2000. The results of
Carter and others (2007) were summarized above, but the paper also provides evidence
(requiring strong assumptions) from Honduras that households which are below or fall below an
27

asset threshold of $250 move to a low-level equilibrium. (Carter and others 2007 at p.852).
A similar threshold is observed for poorer households in Ethiopia.
Premand and Vakis (2010) looks at the effect of several different types of shocks in Nicaragua
drought, rainfall shortage, and child sickness and finds that each increases the probability that
households remain poor. Persistent welfare impacts are not found, however, from Hurricane
Mitch in Nicaragua (Premand 2010). Lybbert and others (2004) identifies a low-wealth
equilibrium among pastoralists in southern Ethiopia: below a certain herd size, most households
are unable to recover from a livestock mortality shock of 25 percent of the herd within three
years.
Several studies provide evidence against shock-induced poverty traps, though this research does
tend to show that poorer households have a more difficult time recovering from shocks than
wealthier households. Studying temporary income shocks in Hungary and Russia, Lokshin and
Ravallion (2004) finds that households tend to bounce back in due course from transient
shocks The authors also find, however, that the recovery process is slower for poorer
households (Lokshin and Ravallion 2004 at p.15). In Hungary, for example, the household
income of households in the 25
th
percentile of wealth recovers to 75 percent of its initial value 2
years after a shock of 50 percent of income but recovers to over 90% for households in the 75
th

percentile. Jalan and Ravallion (2004) find similar results in rural China: households seem
capable of bouncing back though poorer household recover more slowly.
16

Ex ante impacts and poverty traps
Poverty traps may also result from ex ante impacts of risk, as households engage in low-risk and
low-return activities. Several of the studies illustrating the ex ante impacts of risk argue that
poverty traps may result from such a process. Dercon (1996) writes that the evidence for
Tanzania suggests that risk considerations affect rural growth and increase rural inequality, via a
poverty trap. (Dercon 1996 at p.506). Dercon and Christiaensen (2011), which studies the
impact of risk on fertilizer adoption and application, concludes that risk induces the persistence
of poverty for some, as if trapped in low return, lower risk agriculture. (Dercon and
Christiaensen 2011 at p.169). Finally, Elbers, Gunning, and Kinsey (2007) concludes from his
analysis of rural households in Zimbabwe that Chronic poverty is often diagnosed as the result
of poor endowments, as opposed to transient poverty, which is seen as the result of risk. The
calculations here show that risk has a very substantial effect on mean consumption as well. In
that sense risk is a structural determinant of chronic poverty (Elbers, Gunning, and Kinsey 2007
at p.16).
Conclusions
This review attempts to systematize the large body of literature produced in the last two decades
documenting how shocks affect households, in particular among the rural poor. The clear

16
Interestingly, Jalan and Ravallion (2002) find evidence of geographic poverty traps in China: living in a poor
area lowers the productivity of a farm-households own investments, which reduces the growth rate of consumption,
given restrictions on capital mobility (Jalan and Ravallion 2002 at p.343).
28

conclusion from this evidence is that risk is a constant feature in the lives of the poor, and that
remarkably; poor households can be resilient to shocks, as they are able to protect much of their
consumption and to recover relatively quickly from most shocks. However, among the poorest,
this is not always the case, as they have fewer ways to prepare ex-ante, either by diminishing
their exposure or by obtaining sufficient insurance. As a result, when shocks hit, the poorest
families are left with few options to cope, which often leads to productive asset depletion and
decreases in consumption and in human capital investment. By far, the largest and most long-
term impact of shocks is on human capital, when infants in their first 1,000 days of life are
particularly sensitive to changes in nutrition. The possibility of such large losses also leads poor
households to avoid risk at all cost, for example by choosing low-risk, low-return economic
activities. There is therefore strong reason to believe that risk is a driver of poverty traps.
The policy relevance of these conclusions is clear. First, policies need to help the most
vulnerable (that is, the poorest) to avoid the costs in human capital that shocks may impose.
Nutritional support interventions and cash transfers can play a crucial role in averting such
damages, but they need to be deployed quickly after shocks hit to be really effective. Second,
policies should provide households with better tools to manage risk ex-ante, such as access to
better protection and insurance mechanisms, which can be formal (financial products) or
informal (migration). These tools can enable households to protect their consumption and
productive assets when shock hit, but in addition they can increase the willingness of households
to take certain risks in their economic activities, and to grow their income in the long run.
Nevertheless, a few questions remain unanswered. The empirical challenges apparent from the
review of this literature include, in addition to the proper identification of shocks (in particular
idiosyncratic shocks), identifying the mechanisms through which risk affects outcomes. In
particular, interactions between different risks and particular obstacles to managing them are not
clearly identified in the literature, which makes it difficult to determine which tools can be most
effective to manage risks. Specifically, the degree of complementarity or substitutability between
interventions such as cash transfers, infrastructure, and public service provision could be better
understood.

29

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45

Summarized Impacts from Selected Studies

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Ainsworth, Beegle, and
Koda
Tanzania Adult Mortality Human Capital
For 7-10 years olds, attendance of maternal
orphans 10 percentage points lower than children
with living parents or paternal orphans; two-
parent orphans suffer the same; 7-10 year olds
from poor households with a recent adult death
had 10 oercentage point lower attendance rate
than children from similar households without
adult death; orphan status and recent adult deaths
not stat. sig. on attendance of older children; for
hours of attendance, results are not individually
significant; conditional on attending school,
hours attended declines about 13 hours for girls
who become maternal orphans and 8 more hours
for girls who become two-parent orphans upon
mother's death (5 hours for girls whose father
died); 12-14 fewer hours per week six month or
less before an adult death with recovery more
than six months after a death (about 10 hours for
boys but not stat. sig.for girls)
Children aged 7-14
from 686 households
from the Kagera
Health and
Development Survey
46

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Aizer, Stroud, and
Buka
United States Health Human Capital
OLS finds not stat. sig. effect on years of
schooling from increase in prenatal cortisol
levels (same for sibling subsample); fixed effects
finds stat. sig. reduction of 0.36 years of
schooling (26% of a SD) from a one SD
increase in prenatal cortisol levels (results same
when time-varying controls included); exposure
to high prenatal cortisol (top quartile of
distribution) associated with 0.4 fewer years of
schooling in OLS in full sample (similar for
sibling subsample) and around 0.75 fewer years
(51% of a SD) in fixed effects; varied but small
effects of prenatal cortisol on brith weight; linear
model finds no stat. sig. effect of prenatal
cortisol on verbal IQ but fixed effects
"borderline" stat. sig. impact on verbal IQ of 47
percent of a standard deviation (7 points); linear
model shows stat. sig. increase in probability of
severe chronic condition from cortisol with fixed
effects finding a 9.5 percent increase in this
probability from a one SD increase in cortisol;
cortisol in top quartile of distribution increases
probability of severe chronic condition by 3.8
percent (imprecisely estimated)
1103 children born to
mothers enrolled in
National
Collaborative
Perinatal Project and
sibling subsample of
326 children; adult
outcomes at 43-45
years old (?); children
outcomes at age 7
Akresh and de Walque Rwanda
Civil/Political
Conflict
Human Capital
Children ages 6 to 15 exposed to genocide
complete 0.555 years less schooling (18.3%
decline); 15 percentage points less likely to
complete 4th grade (37.8% decline compared to
baseline completion rates)
18,528 (1992) and
27,114 (2000)
individuals from 1992
and 2000
Demographic and
Health Surveys for
Rwanda
47

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Akresh and others Nigeria
Civil/Political
Conflict
Health
War-exposed girls ages 0-3 during war had
reduced height in adulthood of 0.75cm (average
exposure of 17.5 months), with ages 4-12
experiencing a similar impact; war-exposed girls
ages 13-16 during war had reduced height in
adulthood of 4.53cm (average exposure of 20.6
months) or two-thirds of the SD of height
2003 and 2008 rounds
of nationally
representative
Nigerian
Demographic and
Health Surveys of
women aged 15-49;
restricted to birth
cohorts 1954-1974;
five age bands 0-3, 4-
6, 7-12, and 13-16
with control group
from November 1970
Akresh, Lucchetti, and
Thirumurthy
Eritrea
Civil/Political
Conflict
Health
Difference-in-differences estimates find children
in war regions and alive during war with height-
for-age z-scores lower by 0.45 SDs; D-in-D also
finds children born during war with height-for-
age z-scores 0.42 SDs lower and children born
before the war with height-for-age z-scores 0.34
SDs lower; each month of war exposure reduce
height-for-age z-score by 0.04; including a
measure of war intensity, find that children alive
during war have lower height-for-age z-score in
higher war intensity areas (1 percent point
increase in number of IDPs lowers height-for-
age z-scores by 0.019 SDs with and 0.017 SDs
without parental controls; effects for children
born during or before war of similar magnitude);
impacts are large: for instance, child born during
war in region with mean war intensity has height
8.6% less relative to average height-for-age z-
scores
2002 nationally
representative Eritrea
Demographic and
Heath Suryey; 5199
children
48

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Akresh, Verwimp, and
Bundervoet
Rwanda
Civil/Political
Conflict; Crop Failure
Health
Children born during crop failure have a not stat.
sig. 0.173 SD lower height-for-age z-scores; stat.
sig. additional 0.855 SD lower for girls (.424
SDs if alive during crop failure); children born
during civil war in war region have stat. sig.
0.823 SD lower height-for-age z-scores without
additional impact for girls (.234 SDs if alive
during civil war); girls in poor households (< )
have 1.331 SDs lower height-for-age z-score if
they were born during crop failure (not stat. sig.
for boys in poor and all children in nonpoor
households); being born during civil war leads
to stat. sig. .978 SD decline in poor households
and 2.204 decline in nonpoor households with no
larger effects for boys than girls in poor
households but larger effects for boys in nonpoor
households
501 children under 5
from Rwandan
Department of
Agricultural Statistics
survey linked with
1992 UNICEF survey
Alderman Pakistan Income Consumption
Households with negative followed by positive
income shock does not reduce consumption and
increases debt by 0.532 rupees for every rupee
that income decreases; households with two or
more negative shocks reduce consumption by
0.301 rupees for every rupee that income
decreases, do not increase debt or reduce cash
holdings, and sell physical assets
947 households from
panel over 3-year
period
Alderman, Hoddinott,
and Kinsey
Zimbabwe
Civil/Political
Conflict; Drought
Health; human
capital
In Maternal FE model with Instrumental
Variables, drought and civil war experienced by
children under three lead to a reduction of 3.4cm
of height in adolescence, 0.85 grades less
schooling, and 6 months increase in age at which
children start school
665 children from
longitudinal surveys
in Zimbabwe
49

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Alderman, Hoogeveen,
and Rossi
Tanzania Drought Human Capital
Effect of recent crop loss (2004) and drought or
flood in last ten years (1994-2004) on school
entry and completed years of schooling not
always stat. sig.
1147 individuals aged
10-20 from 2004
Kagera Health and
Development Survey
and 1991-1994
Kagera Health and
Development Survey
Almond United States Health
Health; Human
Capital; Assets
and Productivity
Children in utero during 1918 influenza
pandemic 15 percent less likely to graduate high
school; male wages 5-9 percent lower; SES
reduced; likelihood of being poor increased as
much as 15%; children in first trimester during
peak of pandemic had highest average welfare
payments in surrounding 56 birth quarters April
1911 to April 1925; disability rates 20 percent
higher at age 61 for men in utero at height of
pandemic; impacts found for men and women
1960-1980 U.S.
Census Micro Data
Ampaabeng and Tan Ghana Famine Human Capital
One SD increase in measure of famine intensity
leads IQ to fall by almost 7 percent for children
ages 0-2; no effect on children 3-8
560 from Ghana
Education Impact
Evaluation Survey of
2003 and Ghana
Living Standards
Survey II of 1988/89
Asfaw and von Braun Ethiopia Health Consumption
HH head becoming unhealthy lowers growth rate
of quarterly nonfood consumption between 23
and 28 percentage points; reject hypothesis of
purchased food consumption insurance but
cannot reject hypothesis of total food
consumption insurance
First (1994) and third
(1995) rounds of
Ethiopian Rural
Household Survey
50

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Baez Tanzania
Civil/Political
Conflict
Human Capital;
Health
Among local children under 5, influx of refugees
led to 0.3 SD decline in anthropometrics, 15-20
percentage point increase in infectious disease
incidence, and 7 percentage point increase in <5
mortality over one year later; variation in
exposure to refugee influx led to 1.2% reduction
in height, 7.1% reduction in years of schooling,
and 8.6% decline in literacy
Between 500 and
2200 children from
1992 and 1996
Tanzania
Demographic and
Health Survey (for <5
mortality,
anthropometrics, and
morbidity); 5 rounds
of Kagera Health and
Development Survey
between 1991 and
2004 (long-term
results)
Baez and Santos Nicaragua Natural Disasters
Human Capital;
Health
Children in areas affected by Hurricane Mitch
30% less likely to be taken for medical
consultation (cond. on being sick); probability of
undernourished increased 8.7 percentage points;
labor force participation increased 58%;
proportion of children working and enrolled in
school increased 8.1 percentage points; no effect
on school enrollment
2,764 households
from 1998, 1999, and
2001 Nicaraguan
Living Standards
Measurement Survey
and 1998 and 2001
Nicaraguan
Demographic Health
Surveys; study
children 6-15 for
education and labor
supply, 0-15 for
health, and 0-4 for
nutrition
Baez and Santos El Salvador Earthquake Income; Poverty
Earthquakes associated with 1/3 reduction in hh
income per capita from pre-shock average in
upper half of ground shaking distribution
653 households from
BASIS El Salvador
Rural Household
Surveys 2000 and
51

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
2002
Baird, Friedman, and
Schady
59 Developing
Countries
Economic Health
1% decline in per capita GDP results in infant
mortality increase between 0.24 and 0.40 per
1,000 children born; effect larger for girls than
boys
123 demographic and
health surveys
covering 59 countries
in Africa, Latin
America, and Asia
between 1986 and
2004; info on 760,000
women and 1.7
million births
Banerjee 19th Century France Agricultural Health
Those born in regions affected by Phylloxera 1.6
to 1.9mm shorter than others at age 20,
corresponding to 0.6 to 0.9 cm shorter children
born in wine-growing families in years in which
region affected (children born before or after
crisis not found affected); no long0term effect on
morbidity at age 20 and other measures of health
3,485 individuals
from military and
other data 1872-1912
Banerjee Bangladesh Flood Wages
Real agricultural wages decline 9% during
flooding in period of dry-season crops and
increase approximately 10% in period of wet-
season crops; decline 9% with flooding between
September and October; wages tend to be 8%
higher in more flood-prone districts but are 6%
lower everywhere in flood months when
inundated (more flood prone districts experience
a slightly smaller decline); wages decline 14% in
all districts inundated in extreme flood months
but less so (by 5%) in more flood prone districts;
4% larger decline in wages in extreme flood
conditions in inundated districts than under
Bangladesh Bureau of
Statistics; 3,675
observations in series
on real agricultural
wages
52

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
normal flood conditions
Bandyopadhyay and
Skoufias

Non-heads of household who work are 5-7
percentage points less likely to be in same
occupation, same sector, or both in agriculture if
hh lives in flood-prone Upazila; ex ante flood
risks associated with diversification across
sectors; ex ante rainfall variability associated
with diversification across types of employment;
in Upazilas not prone to flooding, occupations of
members of hh more likely to be diversified bw
sectors as well as bw self-employment and wage
employment (higher local rainfall variability also
associated with low return diverse occupational
portfolio and sig. lower hh consumption in these
areas)

Becchetti and Castriota Sri Lanka Natural Hazards
Income; Health;
Assets and
Productivity
Tsunami led to loss of 40 per cent of real income
305 microfinance
borrowers
53

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Beegle and others Tanzania Crop shock; Weather Human Capital
For boys, one SD (5.7) hour increase in child
labor leads 10 years later to loss of
approximately one year of schooling (no sig.
effect on girls' education)
672 children from
Kagera Health and
Development Survey
1991-1994
Beegle, De Weerdt, and
Dercon
Tanzania Adult Mortality Consumption
Adult death leads household consumption to
decline by 7% in first 5 years after death
compared to 13% growth of average household
over this period; deaths that occurred 6-13 years
ago have negative but not sig. effects
2,611 households
from Kagera Health
and Development
Survey 1991-1994
and Kagera Health
and Development
Survey 2004
Beegle, De Weerdt, and
Dercon
Tanzania Adult Mortality
Human Capital;
Health
Maternal orphanhood between ages 7 and 15
leads to 2cm less in final height attainment and a
decrease of one year of educational attainment
(no causal link for paternal orphanhood)
718 children from
Kagera Health and
Development Survey
1991-1994 and
Kagera Health and
Development Survey
2004
Bundervoet, Verwimp,
and Akresh
Burundi
Civil/Political
Conflict
Health
Additional month of war exposure leads to 0.047
SD decline in children's height-for-age z-scores;
child exposed to war for average duration has
height-for-age z-score one SD less than child not
exposed
1,196 children
between 6 and 60
months from 1998
Burundi Priority
Survey
54

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Bustelo Guatemala Natural Hazards
Human Capital;
Child Labor
Tropical storm led to significant increase in child
labor (children ages 13 to 15) and school
participation decreased (only for males); children
ages 7 to 12 not very affected; in departments
experiencing average shock intensity, probability
of boy being enrolled declines 8.4% compared to
increase of 15.6 percentage points in national
trend (population affected by storm); in
departments experiencing average shock
intensity probability of boy being enrolled
declines 6.0% compared to increase of 13.0
percentage points observed in departments with
no economic damages (economic damages); in
department with average value of population
affected by shock, probability of being engaged
in labor increased 7.3% compared to 10.6
percentage point decrease in national trend
18,377 (ages 7 to 12)
and 8,005 (ages 13 to
15) from 2000 and
2006 Guatemalan
Living Standards
Measurement Studies
Bustelo, Arends-
Kuenning, and
Lucchetti
Colombia Natural Hazards
Health; Human
Capital
Height-for-age z-score of children (under age 5)
in affected departments right after earthquake
0.182 SDs lower (vanishes in 2005); 0.296 SDs
lower in 2000 in Quindio, department most
affected by the earthquake (0.175 SDs lower in
less affected departments) (no sig. impact in
2005); schooling of children in Quindio reduced
7 percent but in 2000 but no stat. sig. negative
impact in 2005 (children ages 6 to 11); for
children 11 to 15 negative and sig. impact from
earthquake in 2005 and in 2005 (children ages 10
to 14 for 2000 and 5 to 9 for 2005); likelihood of
being enrolled for children in Quindio declined
6.5% and 5.3% in 2000 and 2005 for children
ages 11 to 15
18,708 for HAZ,
28,259 for schooling
(ages 6 to 10)1990,
27,774 for schooling
(ages 11 to 15) from
1995, 2000, and 2005
Columbia
Demographic
Household Surveys
55

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Carter and others Ethiopia; Honduras Natural Disasters
Assets and
Productivity
In Honduras, basic model indicates that 10%
asset loss from Hurricane Mitch results in 18
percentage point reduction in growth for first
wealth quartile and 9 percentage point loss for
top wealth quartile; low-level equilibrium found
at threshold of $250; similar effects are found for
drought in Ethiopia
850 households for
Honduras; seven-
round household
survey between 1996
and 1999 in Ethiopia
Case, Paxson, and
Ableidinger
Ghana, Niger, Uganda,
Kenya, Tanzania,
Malawi, Mozambique,
Zimbabwe, Namibia,
Zambia
Adult Mortality Human Capital
Using model with household FE, on average
orphans ages 6 to 14 are 6.7 percentage points
less likely to be enrolled in school (10%
reduction in chance of being in school); no
difference between boys and girls, effect
increases with age, effect does not decrease with
wealth
19 DHS studies in 10
countries between
1992 and 2000
Chen and others Taiwan Natural Hazards Mental Health
Higher PTSD scores for subjects affected by
Chi-Chi earthquake themselves injured, family
members injured or killed, friends injured or
killed, or who separated from family with
younger children and females reporting more
PTSD symptoms
1,169 elementary and
1,201 junior high
students
Chen and Zhou China Famine Health; Income
Individuals of 1959 birth cohort were 3.03cm
shorter than would have been in absence of
famine, 3cm and 2.84 cm shorter for 1960 and
1962 birth cohorts
1989, 1991, 1993,
1997, and 2000 China
Health and Nutrition
Surveys (focus on
1991 data with 3,616
households); 1,946
individuals
Chin
Kenya, Liberia,
Malawi, Mali, Zambia,
Zimbabwe
Health Violence
One percentage point increase in prevlance of
HIV increases risk of physical violence by 1.8
percentage points and of sexual violence by 2.0
percentage points by spouse against female
DHS surveys from 6
countries 2006-2010;
26,705 observations
56

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
partner (entire sample)
Christiaensen and
Sarris
Tanzania Multiple Welfare
Drought or health shock in 2003 led to average
18 percent gross loss in 2003 consumptions
smoothed to net 8 percent loss in Kilimanjaro; no
welfare losses from drought and health shocks in
Ruvuma
Two survey rounds of
900 households in
2003 and 2004
Christiaensen and
Subbarao
Kenya Health; Weather Health; Rainfall
Reduction in incidence of malaria in
communities in non-arid zones to max. of 10%
would reduce average vulnerability 22%
9,171 households
(1994) and 8,960
households (1997)
from Welfare
Monitoring Surveys
1994 and 1997
Das and others Zambia Teacher Human Capital
5 percent increase in teacher absence rate leads
to 4 to 8 percent reduction in average gains in
Mathematics and Reading of Grade 5 students
during the academic year
177 schools; 402
teachers; 2,190 pupils
De Vreyer, Guilbert,
and Mespl-Somps
Mali Natural Hazards Human Capital
Locust plague reduced school enrollment 7.5%
and 5% for boys and girls born and <2 (1988 and
1989 cohort) during shock, respectively; locust
plague reduced educational attainment 1.0 grade
and 0.44 grades for girls and boys at age of
beginning school during plague (1981 cohort),
respectively; proportion of enrolled children
completing primary school reduced 16% and
13% for boys and girls at age of entering school
during plague (cohort 1981 in rural areas),
respectively,
1998 Population
Census of Mali
57

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
del Ninno and
Lundberg
Bangladesh Natural Hazards Health
Children no older than 60 months in last survey
round exposed to flood are about 0.2 SD (1 in.)
smaller than unexposed; evidence of catch-up
growth, but none that growth in children exposed
is greater than growth in children not exposed
Three survey rounds
1998-1999; 4,433
individuals from 757
households
del Ninno and others Bangladesh Natural Hazards
Food and
Nutrition; Health;
Assets and
Productivity
Caloric intake of households exposed to flood
272 calories per person per day higher than not
exposed; 15.6% of households exposed became
food insecure; no appearance of gender impacts;
rate of wasting among children ages 0 to 5
21.0% in households not exposed and 25.3% in
very severely exposed households (increase in
stunting as well)
757 households from
Food Management
and Research Support
Project Household
Survey 1998
Dercon Ethiopia; Zimbabwe Multiple Health Review
Four survey rounds
1989 and 1994-1997
of about 350
households
Dercon Ethiopia Multiple
Consumption;
Growth
10% reduction in rainfall results in decline in
food consumption of 5% (3% for smaller
sample); 10% reduction in rainfall about 4-5
years in the past reduced current growth rates 1
percentage point

Dercon and
Christiaensen
Ethiopia Ex Ante Risk Fertilizer Use
Increasing predicted level of consumption by one
SD when rains failing increases level of fertilizer
per hectare by 16% (one SD increase in livestock
holding increases level 20%)
About 1,450 rural
households from
Ethiopian Rural
Household Survey
1994-1999
58

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Dercon, Hoddinott, and
Woldehanna
Ethiopia Multiple Consumption
Drought at least once in last 5 years reduces per
capita consumption about 20% and illness about
9% (effects of drought larger for female-headed
hh, hh with head without schooling, and hh in
bottom three landholding quintiles in villages;
effects of illness larger for richer hh and hh with
head without schooling); droughts, lack of
demand for nonagricultural products, and illness
2-5 years in past reduce current consumption
(13%, 21%, and 14%, respectively)
1,303 households
from Ethiopian Rural
Household Survey
1989, 1994, 1995,
1997, 1999, 2004
D'Souza and Jolliffe Afghanistan Food Price Consumption
1% increase in wheat flour price associated with
0.20% decline in real monthly per capita food
consumption, 0.07% decline in per capita daily
calorie intake, 0.10% decline in food
consumption score, 0.25% decline in grams of
protein consumed per person per day; decline in
real monthly per capita food consumption greater
in urban areas with no stat. sig. decline in calorie
intake in urban areas but 0.074% decline for 1%
increase in wheat flour price (dietary diversity
declines more significantly in urban hh)
20,491 househuolds
from National Risk
and Vulnerability
Assessment 2007/08
59

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Dupas and Robinson Kenya
Civil/Political
Conflict
Income;
Consumption;
Health
Election crisis resulted in decline in income of
47% for entrepreneurs, 59% for shop owners,
and 89% for women supplying transactional sex
(income from sex work) from average week in
November 2007 to early January 2008; food
expenditure of women who supply transactional
sex (living in semi-urban area) declined 20-26%
in January 2008 (9% less in February) than in
November 2007 (no decrease for entrepreneurs
and 10% decline for shop owners); average
number of unprotected sex acts per client
increased 40% from November 2007 to first
week January 2008 and 100% to third week
January (even though total number of
unprotected sex acts lower in January than before
election crisis); after crisis, total amount of
unprotected sex increased by 0.24 and 0.39 acts
per week in February and March, respectively
(baseline 0.72 acts in November); unprotected
anal sex acts per week increase by 0.12 and 0.14
in February and March (baseline 0.03 acts per
week in November 2007)
Three samples of 226
women, 151 self-
employed
entrepreneurs, and
220 shopkeepers
Duryea and Morales El Salvador Aggregate
Human Capital;
Child Labor
Global financial crisis reduced school attendance
for children ages 10 to 16 by 2.1 percentage
points (no difference by gender); increased
probability of attending public school by 5
percentage points among children ages 10-16
attending school (no difference by gender);
increased child employment of 2 percentage
points (stronger for males and not sig. for
females)
Encuesta de Hogares
de Propositos
Multiples for 2000-
2008; 102,986
(attendance and
employment), 86,070
(public school)
60

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Fafchamps, Udry, and
Czukas
Burkina Faso Drought
Assets and
Productivity
Livestock sales make up for at most 30%
("probably closer to only 15%) of income
shortfalls from drought
25 households from
ICRISAT in Burkina
Faso
Ferreira and others Brazil Food Welfare
Incidence of extreme poverty increased from
110% to 12.3% because of higher food prices
(less pronounced because income effects taken
into account)
2002/2003 Household
Budget Survey
Frankenberg, Smith,
and Thomas
Indonesia Aggregate
Consumption;
Assets and
Productivity;
Labor; Household
In response to Indonesian financial crisis, labor
supply increased; real wages fell; hh reduced
spending on semidurables; hh maintained
spending on food; average hh reduced real per
capita consumption by almost 25%
1,971 households
from Indonesia
Family Life Survey
1997 and 1998
Friedman, Hong, and
Hou
Pakistan Food Price Health
Average hh caloric availability fell almost 8%
between 2006 and first half of 2008; urban more
worse off than rural
30,823 households
from PSLM 2005-
2006, 2007-2008, and
2010
Garrison and others United States Natural Disasters Mental Health
Exposure to Hurricane Hugo correlate of PTSD
rates among children ages 11 to 17 years old
1,264 children
61

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Genoni Indonesia Health Consumption
For individuals ages 30 to 60, growth rate in
individual earnings declines 19% for
deteriorations in walking 5 kilometers and 26%
for deteriorations in other intermediate activities
of daily living (ADLs); growth rate in per capita
hh earnings decline 8 to 12% for overall sample
and 11 to 18% for individuals working for pay
from illness; effects on per capita nonmedical
consumption growth small and not stat. sig.;
effects on food consumption small and not stat.
sig (effects on growth rates in hh earnings larger
for less educated individuals but effects on
consumption not significant; small and not large
hh experience reduction in overall earnings due
to ADL deteriorations and effect on consumption
not stat. sig. for either small or large hh)
7,313 individuals
from Indonesia
Family Life Survey
1997 and 2000
Gertler and Gruber Indonesia Health Consumption
Chronic symptoms associated with reduced labor
supply of 1 hour per week; moving from able to
perform all ADLs to unable to perform one ADL
implies 2.8 fewer hours of work per week (7.6%
of baseline hours); labor supply of other family
members unchanged by health measured as
ADLs and chronic illness symptoms but
increases when measured as change in illness
symptoms; overall effect of hh head with illness
symptoms is small and not stat. sig.; health
shocks as illness and chronic illness do not affect
hh earnings but measured by ADLs significantly
reduce total hh earnings; illness symptoms and
chronic symptoms do not affect consumption;
ADL measure shows that move from able to
perform all ADLs to unable to perform one ADL
would reduce consumption by 1.8%
3,933 households
Indonesian Resource
Mobilization Study
1991 and 1993
62

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Goenjian and others Armenia Natural Hazards Mental Health
Elderly, young adult victims of earthquake
nearer to epicenter had higher scores on PTSD
Reaction index 1.5 years later
179 individuals
(Posttraumatic Stress
Disorder Reaction
(PTSD) Index); 60
individuals (DSM-III-
R criteria)
Goenjian and others Armenia Natural Hazards Mental Health
Extent of loss of family members correlated with
posttraumatic stress disorder and separation
anxiety disorder 1.5 years after Armenian
earthquake
218 children (Child
Posttraumatic Stress
Disorder Reaction
Index, Depression
Self-Rating Scale,
SAD section from
Diagnostic Interview
for Children and
Adolescents)
Goenjian and others Nicaragua Natural Disasters Mental Health
6 mo. after Hurricane Mitch, severity of
posttraumatic stress and depressive reactions
consistent with dose-response; 68% of variation
in postraumatic stress reaction accounted for by
level of impact (city), objective and subjective
features, and thoughts of revenge; 59% of
variance in severity of depression accounted for
by severity of posttraumatic stress reaction, death
of family member, and sex
158 adolescents
(hurricane exposure
questionnaire, Child
Posttraumatic Stress
Disorder Reaction
Index, Depression
Self-Rating Scale)
Goland Peru Ex Ante Risk Agricultural yield
Net yields reduced 7% on average by additional
travel and transport required to tend dispersed
plots
19 families from
Cuyo Cuyo study area
63

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Grgens, Meng, and
Vaithianathan
China Famine Health
For rural residents and after controlling for
selection, height of children who survived
Chinese famine reduced 1.49 to 2.22cm
(mothers) and 1.47 to 2.22cm 9fathers) for
cohort born 1957-1961 (ages <5 during famine) ;
0.46-1.19cm (mothers) and 0.40-0.87cm (father)
for cohort born between 1948 and 1956 (ages 5
to 13 in 1961); estimates of selection between
0.85 and 2.64 for these groups (urban residents
seem to be less affected)
2,115 families (rural)
and 1,080 (urban)
from first four waves
of China Health and
Nutrition Survey
Grimard and Laszlo Peru
Civil/Political
Conflict
Health
Birth district deaths and disappearances in year
before birth from Peru's conflict negatively
affected women's stature (for 1975-1990
sample); birth district deaths and disappearances
at age 1 predict BMI more likely to be abnormal
(1980-1990 sample); district level deaths and
disappearances at age 2 increase probability a
woman is anaemic but decreases probability at
age 3 and 5 in 1975-1990 sample; conflict in
birth district in early ages has no effect on
women reporting experiencing emotional
domestic abuse; negative correlation between
deaths and disappearances and probability of
women reporting experiencing physical domestic
abuse
5,750 women (1980-
1990 sample) and
7,722 (1975-1990
sample) from 5th
round of Peru
Demographic and
Health Survey from
2004-2008
64

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Haushofer, de Laat, and
Chemin
Kenya Natural Hazards Mental Health
10mm decline in rainfall in previous dekad (10
days) result in cortisol increase of 17.6 nmol/l
among farmers (49.7% increase from baseline);
for non-farmers, 10mm decrease associated with
0.1 nmol/l increase (0.7% increase from
baseline); 10mm decline in rainfall leads to
increase in cortisol6.91 nmol/l larger for farmers
than non-farmers (35% increase from baseline);
10mm decline in rainfall associated with increase
in worrise 0.08 SD larger for farmers than non-
farmers
283 farmers; 896
urban metal workers
Hoddinott Zimbabwe Natural Hazards Health
Negative rainfall shocks reduce adult women's
BMI, but rainfalls shocks do not effect men's (
326 men and 593
women; sample
restricted to adults
with children ages 6
to 60 months old;
sample from three
resettlement schemes
1983-1984, 1987,
1992-1998
Hoddinott and Kinsey Zimbabwe Natural Hazards Health
10 percent negative deviation in rainfall from
long-term average leads BMI of women to
decline 1.15%; BMI of men unaffected (BMI of
wives of hh head decline 2.2 percent with 10%
reduction in rainfall, of daughters 3.9%, and of
daughters-in-law unaffected); impacts larger for
poorer hh
926 women and 560
men; sample
restricted to adults
with children ages 6
to 72 months old;
sample from three
resettlement schemes
1983-1984, 1987,
1992-1998
65

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Hoddinott and Kinsey Zimbabwe Natural Hazards Health
Drought reduces height of children ages 12 to 24
by 1.5 to 2cm with limited catch-up growth; no
evidence for similar effect for children ages 24 to
60 months (children in poorer hh more and
offspring of women who are daughters of hh
head more disadvantaged)
222 ages 12-24 mo.;
209 ages 24-36 mo.;
239 ages 36-48 mo.;
194 ages 48-60 mo.;
sample from three
resettlement schemes
1983-1984; 1987;
1992 onwards
Islam and Maitra Bangladesh Health
Consumption;
Assets and
Productivity
Short-term health shocks do not have stat. sig.
effect on changes in food consumption (mixed,
even positive, results for non-food consumption);
in hh receiving average amount of microcredit,
death of main income earner causes value of
livestock to decline by 2.32 thousand Taka;
without microcredit, declines 38.59 thousand
Taka
2,694 households
from 1997-1998,
1999-2000, and 2004-
2005 rounds of
household survey
Ivanic and Martin

Food Poverty
Simple average of estimated effects of first
quarter 2008 commodity price increases is 4.5
percentage point increase in national poverty
rates
92,334 observations
from 10 household
surveys 1998-2005
Jalan and Ravallion China Agricultural Consumption
Perfect insurance rejected (strongest for poorest
decile for which 40% of income shock translated
to current consumption; for richest third,
consumption protected from 90% of income
shock)
6,651 households
(original panel) from
Rural Household
Survey 1985-1990
66

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Jensen Cote d'Ivoire Natural Hazards
Human Capital;
Health
Adverse weather shock led to decline in school
enrollment rates of 14 and 11 percentage points
for boys and girls ages 7 to 15, respectively with
enrollment rates declining by about 20
percentage points overall for boys and girls
(impacts on boys and girls "nearly identical");
percentage of sick children ages 0 to 10 taken for
consultation declined from about 50% prior to
shock to around one-third ; 3-4 percent more
boys and girls malnourished in regions with
rainfall shock (not stat. sig. for girls), which is
nearly double for boys
Cote d'Ivoire Living
Standards Survey
1985-1988
Kagy Bangladesh Famine Health; Education
Males born during famine 0.48 SDs taller and
obtain 1.89 more years completed education on
average in presence of famine; females born
during famine would have been 0.34 SDs taller
in absence of famine and obtain 0.93 more years
of completed education in presence of famine;
males born during famine in village in highest
famine severity quartile on average 0.583 SDs
taller than first quartile (positive effect for males
only for those born during famine and in village
in third or fourth quartile of famine severity
index); females born during famine negatively
affect and those ages 0 to 5 during famine in
village in third quartile of famine severity shorter
compared to first quartile; males b
2,629 individuals
from Demogrpahic
Surveillance System
1974-1996; 1996
Matlab Health and
Socioeconomic
Survey; 1974
Bangladesh Census of
DSS site
67

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Kazianga and Udry Burkina Faso Drought Consumption
Approximately 55% of changes in transitory
income passed onto consumption (poor's
consumption more sensitive); one SD increase in
income results in decline of 335 hours (9%) of
total labor (decline larger for poorer hh); hh hold
assets that could have been sold after abnormally
high declines in consumption
392 households from
ICRISAT Burkina
Faso 1981-1985
Kochar India Agricultural Labor
Increased wage income permits small, medium,
and large farm hh to compensate for 45%, 62%,
ad 41% of small crop income shocks,
respectively; large negative crop shocks
uncompensated; loss of wage income
"significant" after illness during peak season
(particularly of males;
439 households from
ICRISAT for central
India
Len Peru
Civil/Political
Conflict
Human Capital
0.21 fewer years of education obtained
conditional on exposure to violence of Peruvian
civil conflict before starting school (early
childhood (ages 2 to 3)or pre-school age (ages 4
to 6)) (more important for women and native
than Spanish speakers, short-term effects
stronger)
139,446 individuals
from 1993 and 2007
census
Lin and Liu Taiwan Health
Human Capital;
Health
Males born in 1919 (in utero during influenza
pandemic) obtain 0.06 (1.2%) fewer years of
education; 1 percentage point increase in
maternal mortality rate would reduce schooling
by 0.8 years (25%) and height by 2.88cm (0.74
SDs); in utero influenza increases risk of
diabetes, circulatory disease, respiratory disease,
and glaucoma (trimester of exposure does not
matter for health outcomes)
809,721 from 1980
Census; 1989 Survey
of Health and Living
Status of the Elderly
in Taiwan
68

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Little and others Ethiopia Natural Hazards
Assets and
Productivity
After drought, 46.5% of very poor remained very
poor, 30.9 percent improved but still below
poverty level, 8 percent move above poverty
level but still vulnerable, 6 percent moved to
highest wealth category; 16% in poor asset
category moved into better off category; overall,
after six years 76% of poor households still poor
416 households from
seven round study
2000-2003; case
studies of 62
households
Little and others Ethiopia Drought Assets
Two poorest quartiles lost about 80% and 60%
of assets from 1999-2000 drought between 1998
and 2000; highest quartile lost 6%
416 households (62
case histories) from
BASIS Surveys 2000-
2003
Lokshin and Ravallion Hungary; Russia Transient` Income
In Hungary, hh recovers to 83% of initial value
in 3 years after shock of 50% of income; 80% in
Russia; In Hungary, hh in 25th percentile
recovers to about 75% of steady-state income
and 75th percentile to over 90% two years after
shock; 26% and 85% in Russia
3,040 households
from HHPS 1992-
1997 and 3,937
households from
RLMS 1994-1998
Lonigan and others United States Natural Hazards Mental Health
Significantly higher PTSD symptoms for
children with more or more severe exposure to
hurricane (effect more significant for girls); girls
with more anxiety and PTSD symptoms than
boys
5,687 children ages 9
to 19 self-reported
Lucchetti Peru Natural Hazards Poverty
Increment in objective poverty after earthquake
between 0 and 10 percentage points and in
subjective poverty between 10 and 15 percentage
points; probability of being subjectively but not
objectively poor increases 10% after earthquake
within 10km of earthquake (no effect on
probability of being objectively but not
subjectively poor)
22,022 (province-
level) and 11,649
(household-level)
observations from
2007, 2008, and 2009
Peruvian National
Household Survey
69

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Maccini and Yang Indonesia Weather
Human Capital;
Health
Women with 20% higher rainfall in year and
location of birth 3.8 percentage points less likely
to self-report poor or very poor health; 0.57cm
taller, 0.22 more grades of schooling completed,
live in hh scoring 0.12 SDs higher on asset
index; similar results not found for men
4,615 women and
4,277 men from
IFLS3 2000
Meng and Qian China Famine
Human Capital;
Health; Labor
Individuals in 90th percentile of outcomes
distribution exposed to famine in utero 2.8cm
(1.7%) shorter, 1.4kg (2.3%) less weight, 0.6
years (8.6%) fewer years educational attainment;
exposure at early childhood, 2.7cm (1.6%)
shorter, 3kg (5%) less weight, 0.004 kg/cm
(1.2%) less weight-for-height, and 12.6
hours/week (13.9%) fewer of labor supply
1990 Population
Census; 1989 China
Health and Nutrition
Survey; 1997 China
Agricultural Census
Menon Nepal Ex Ante
Occupational
Choice
1% increase in coefficient of variation of rain
leads to 0.61% decrease in probability of
choosing same occupation as hh head (where
head classified as self-employed in agriculture)
2,388 rural
households and 8,939
rural individuals from
Nepal Living
Standards Survey
1995/96
Miguel Tanzania Weather Violence
Extreme rainfall associated with 0.085 more
witch murders per village-year (twice as many as
other years); drought and flood have similar
impact
736 village-years
from Village Council
Survey and
Household Survey
2001-2002
70

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Mu and Zhang China Famine Health
Compared to control cohorts, females born
during famine 2.673% more likely to be disabled
than males (reverses gender gap in disability rate
by about 195%; with average level of famine
severity famine increases disability rate 0.66%
more for females than males narrowing gender
gap by 48.2%; exposure to famine increases
gender gap in illiteracy rate by 1.587% (16.5%
increase in gender gap among non-famine
cohort); famine widens gender difference in
illiteracy rate by 4.7%
810,538 individuals
from China
Population Census
1990
Mueller and
Quisumbing
Bangladesh Natural Hazards Income
Wage loss of 4 to 5% for every one-foot increase
of flooding over normal flood depth five years
after flood; wage loss of 4% for every one-foot
increase of flooding over normal flood depth in
agricultural markets (stable over time); 7% in
nonagricultural markets (greater over time)
1,470 wage
observations from
Bangladesh Flood
Impact panel
household survey
1998 to 2004
Najarian and others Armenia Natural Disasters Mental Health
Children with high exposure to earthquake,
whether relocated or not, has significantly higher
rates of PTSD, depression, and behavioral
difficulties
25 children ages 11 to
13 PTSD module of
Diagnostic Interview
for Children and
Adolescents-Revised
and Depression Self-
Rating Scale
71

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Neelsen and Stratmann Greece Famine Human Capital
For 1940 cohort of 1 year olds, famine effects for
literacy not stat. sig.; likelihood of completing
upper secondary or technical school declines
1.2%; number of years of education decline 0.8
mo.; impact on SES not stat. sig.; negative effect
on literacy, upper secondary schooling, and
number of years in education 1941 cohort
exposed during infancy has negative (but impact
on SES not stat. sig.); impact on 1942 cohort
(fetal exposure) on upper secondary education
and years of education not stat. sig. and
likelihood to be literacy increase 0.5 percentage
points (impact on SES not stat. sig.) (results
mixed between specifications with prefecture of
birth and prefecture of birth with urban
interaction)
12,859 individuals
(prefecture
specification) and
29,426 individuals
(prefecture with urban
specification) from
Greek National
Population Housing
Census 2001
Nelson Brazil Health Flu
Individuals born in first quarter of 1919 25.1%
less likely to graduate from college, 20.7% less
likely to be employed, and 272% less likely to
have formal employment; males 22.9% less
likely to graduate from college, 7.2% less likely
to be literate, 27.1% less likely to be employed,
and 26.5% less likely to have formal
employment
379,930 inndividuals
from Pesquisa Mensal
de Emprego 1986-
1998
Neumayer and Plmper 141 Countries Natural Hazards Health
Gender gap in life expectancy declines with
disaster strength; more SES rights for women
offset negative effect of natural disasters on
women
2,241 natural disasters
from Emergency
Disasters Data Base
1981-2002
72

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Nose and Yamauchi Indonesia Food
Assets and
Productivity
Impact of food price shock on hh investment
decision not sig.; reduction in savings and
increase in consumption by farmers not stat. sig.;
anticipated component of price shock has sig.
positive effect on productive investment (for
provincial but not village dummies) but
unanticipated component not stat. sig.;
anticipated food price shock increases
consumption of food; wealthier farmers have
stronger incentive to invest after price shock
1,083 households
from two rounds of
surveys 2007 and
2010
Paxson and Schady

Macroeconomic crisis (real GDP per capita
decline of almost 30%) led to increase of 2.5
percentage points in infant mortality rate for
children born during crisis
Peru Demographic
and Health Surveys
1991/92, 1996, and
2000; 1985/86 and
1991 Peru Living
Standards
Measurement Study
Pitt and Roseznweig Indonesia Health Human Capital
Probability that mother devotes time to labor
force after infant illness (one SD decrease in
latent child health which is an increase in
incidence of child illness by 29%) decreases 0.15
(63%) from mean probability; daughter's
likelihood declines by 0.04 (25%) from mean
probability, likelihood of attending school
declines by 0.075 (15%), participation in home
care increases 013 (53%), and likelihood of
being at home but not engaging in hh care
decline 0.014 (17%) (for boys and girls ages 14
to 18 and health of infants ages three or less)
5,831 household
triads from 1980
National
Socioeconomic
Survey
73

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Pongou, Salomon, and
Ezzati
Cameroon Macroeconomic Health
Prevalence of malnutrition in children <3
increased 16% to 23% between 1991 and 1998
during macroeconomic crises
1,587 (1991) and
1,923 (1998) from
Demographic and
Health Surveys 1991
and 1998
Porter Ethiopia Famine Health
Children in utero or <36 mo. during famine just
under 3cm shorter; children >36 mo not sig.
smaller
1,416 children from
first and sixth round
of Ethiopian Rural
Household Survey
Premand Nicarague Natural Hazards Consumption
Hurricane led to short-term negative effects
(idiosyncratic events); no lower consumption in
medium term
1998-2001 ad 1998-
1999-2001 Nicaragua
LSMS
Premand and Vakis Nicaragua
Natural Hazards;
Weather; Aggregate
Poverty
1997-1998 drought increased probability of hh
remaining at bottom of distribution by 10%,
Hurricane Mitch by 7%, coffee crisis by 8%,
rainfall shortage in July 2000 by 10%, and child
sickness in 2004-2005 by 6%
2,485 households
from Three-round
panel 1998-2005
Pynoos and others Armenia Natural Hazards Mental Health
1.5 years after earthquake strong positive
correlation between closeness to epientre and
overall sevverity of post-traumatic stress reaction
and core component symptoms of PTSD (girls
reported more persistent fears than boys)
231 children ages 8 to
16 using Children's
Post-traumatic Stress
Disorder Reaction
Index
74

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Razzaque and others Bangladesh Famine Heallth
Odds of dying when 0-29 days old 33% higher
for famine-conceived (not sig. for famine-born;
higher for boys than girls); mortality odds when
1 to 11 mo. old for famine-born 47.1 times those
in non-famine cohort (mortality odds higher for
girls and poorest suffered most); mortality odds
when 12 to 23 mo. old 65% higher and 45%
lower for famine-conceived (lower for boys and
the better off); when 24 to 59 mo. old boys'
mortality odds 51% lower than those of girls in
non-famine and famine-conceived cohorts but
only 14% lower in famine-born
149 villages from
Demographic
Surveillance System
1974-1982
Robles and Torero
Guatemala; Honduras;
Nicaragua; Peru
Food Poverty
Food price increases between 2006 and 2008
increases poverty rates about 1 percentage point
in Guatemala, Honduras, and Peru and about 4
percentage points in Nicaragua
Nationally
representative
household surveys
from Honduras 2004
(8,175 households),
Guatemala 2006
(13,686 households),
Nicaragua 2001
(4,959 households),
and Peru 2006
(20,577 households)
Rosenzweig and
Wolpin
India Weather
Assets and
Productivity
Profit-maximizing to own 2 bullocks, but
average number owned is 0.94; relative risk
aversion is 096
788 farmer-years
from ICRISAT 1975-
1984 semiarid tropics
of India
75

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Santos El Salvador Earthquake Human Capital
Likelihood of children ages 6 to 15 in hh highly
exposed to earthquakes to attend school declined
6 percentage points (7%) and to work in general
13 percentage points (19%); affected children
more likely to be working outside hh after quake
(increase from 6.5% to 16.5%); number of hours
worked outside hh conditional on economic
activity increased 32 hours per week (more than
quadruple)
481 household units
from BASIS El
Salvador Rural
Household Survey
2000 and 2002
Shah and Millet
Steinberg
India Drought Human Capital
Experiencing drought in utero associated with
2.6 percentage point decline in likelihood of
recognizing numbers from 1 to 10 and 1.2
percentage point decline in likelihood of doing
simple subtraction problem (baseline 53.9% and
61.6%, respectively); children tested during
drought year in their district score 0.1 percentage
points higher on math tests and report 2
percentage points higher attendance rates in
previous week; children experiencing positive
shock (higher than 80th percentile of rainfall in
district) score 0.5 percentage points lower on
math tests and more likely to report having
dropped out of school (effect stronger in poorer
states and for children whose mother never
attended school)
Close to 3 million
rural children from
Annual Status of
Education Report
2005-2009
Shannon and others United States Natural Hazards Mental Health
Three months after hurricane, 5% of sample
reported symptoms sufficient to be classified for
PTSD diagnosis under DSM-III-R; females and
younger children more likely to receive this
classification
5,687 children ages 9
to 19 from self-
reported PTSD
Reaction Index
76

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
St Clair and others China Famine Mental Health
Among births occurring during famine years
adjusted risk of developing schizophrenia in later
life increased from 0.84% in 1959 to 2.15% in
1960 and 1.81% in 1961
19,605 schizophrenia
cases from psychiatric
case records 1971 to
2001
Suryahadi and Sumarto Indonesia Aggregate Poverty
Chronic poor increased from 20% of total poor
before economic crisis and 35% after; high
vulnerability increased from 6.8% to 18.4%;
total vulnerable increased from 18.1% to 33.7%;
probability that hh will be poor in near future
increased from 16.4% to 27.2%
57,724 households
(1996) and 57,921
households (1999)
National Socio-
Economic Survey and
Village Potential data
set 1996 and 1999
Thienkrua and others Thailand Natural Hazards Mental Health
2 months after tsunami, rates of PTSD symptoms
13% among children in camps, 11% in affected
villages, and 6% in unaffected villages; delayed
evacuation, having felt one's own or a family
member's life to have been in danger, and having
felt extreme panic or fear significantly associated
with PTSD symptoms; prevalence rates at 9
months after tsunami did not decrease
significantly
Children ages 7 to 14
from mental health
surveys
Townsend India Health; Income
Health, Income,
Unemployment
HH consumption is not influenced by
contemporaneous own income, sickness,
unemployment or other idiosyncratic shocks
controlling for village consumption
40 households from
ICRISAT India 1975-
1984
77

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Wagstaff Vietnam Health
Consumption;
Income
Death of working-age hh member associated
with drop in per capita food consumption and in
DMI of hh head (rural sample; some evidence
that lengthy hospitalization affects food
consumption in same way; evidence mixed for
non-food (and non-medical) consumption (in
urban, death associated with reductions in non-
food; in rural with sharp reductions in BMI; but
evidence that lengthy hospitalizations increase
non-food consumption in rural sample); evidence
consumption shifts from food towards items
more essential to recovery of sick hh member
Just over 4,000 hh
from Vietnam Living
Standards Survey
1992/1993 and
1997/1998
Wagstaff and Lindelow Laos Health
Human Capital;
Health;
Consumption
HH members experiencing health shock lost 0.6
points on 5-point of subjective health; wealthier
and better educated able to limit health impacts
of heath shock
About 186 individuals
from survey in three
provinces in 2008
Webb, von Braun, and
Yohannes
Ethiopia Famine Consumption
Top third in wealth of hh in sample (average
annual income $US 100 per capita) coped with
famine better than bottom third of hh ($US42 per
capita average annual income); wealthier hh
achieved drought-year cereal yields three times
higher the poor hh; output from wealthier hh
38kg per capita in 1985 compared to 9.5kg per
capita in poor hh; consumption declined to one
meal or less per day for 63 percent of poorest hh
compared with only 43% of wealthier
Almost 550 hh from
repeat-visit interviews
1989/1990
78

Authors Country Shock - General
Category of
Impact
Selected Effects Sample
Wu, Borghans, and
Dupuy
Indonesia Macroeconomic Human Capital
Price of education increased 126% between 1997
and 2000 (Asian financial crisis) but average real
education expenditures for children ages 6-14
decreased 1% and share of budget allocated to
education declined from 2% in 1997 to 0.9% in
2000; with other evidence, suggests human
capital continued to be accumulated but
substitution in type of schooling
Indonesia Family Life
Survey 1997 and
2000 (4,983 obs. For
IFLS2 - 1997 and
9,735 for IFLS3 -
2000)
Yamano, Alderman,
and Christiaensen
Ethiopia Agricultural Health
Children ages 6 to 24 mo. in communities with
damaged crop area 50% higher than other
communities experienced a growth loss of
0.9cm; food aid led to on average 1.8cm faster
growth among children ages 6 to 24 mo. in food
aid receiving communities than if no food aid
available
2,089 children from
Rural Integrated
Household Survey
Program 1995-1996;
1995/1996 Welfare
Monitoring Survey
Yamauchi Indonesia Weather Health
Seasonality in birth weight (agricultural
production cycle (rainfall patterns)) significantly
affects height-for-age and weight-for-age z-
scores and performance at primary school
Around 350 for height
and weight and
around 800 for
schooling from
village- and
household-level
surveys 2007 and
2010; 1994/1995
PATANAS survey