Theoretical underpinnings and empirical evidence for a new approach to vulnerability to poverty

Abstract

The present research analyzes the debate on the link between risk and future welfare presenting the theoretical underpinning of a new sound empirical framework for measuring vulnerability to poverty. It demonstrates that uninsured risk reduces household's well-being for the more exposed subsets of the population through its impact on the "ex-ante" household's behavior. Challenging the common view that looks at the coping and managing strategies as an optimal "ex-ante" behavior to reduce the potentially harmful consequences of risk, this work demonstrates (theoretically and empirically) that the risk-induced changing behavior actually has a cost in terms of welfare, especially for poor households in developing contexts. If it is the case, current monetary approaches to vulnerability to poverty lead to bias poverty prevention recommendation