This paper attempts to examine the broad theoretical and empirical literature on how poor households respond to shocks to their incomes and livelihoods brought upon by natural disasters and by conflict. Natural disasters and other crises present formidable challenges to the fight against poverty and to the development of human capital. Specifically, they pose serious threats to populations living below, and near levels of absolute poverty and survival. Households respond to circumstances brought upon by crises by altering several aspects of their lives; livelihood diversification, saving and dissaving, labour supply alterations to name a few. Underlying these observed changes are complex coping strategies that households employ based on the information and resources available to them, expectations of the future, and the opportunities and constraints operating in the external environment (such as the connectedness and functioning of markets, and public policy interventions). A vast and detailed literature on the subject of household coping strategies has emerged over the past twenty years in which initial theoretical forays have been complemented by rigorous empirical studies. While a comprehensive review of all the literature on this subject is far beyond the scope of the exercise at hand, the focus is on presenting key issues in household behaviour in the aftermath of shocks. This leads to Section 2 which specifically examines household coping strategies in response to conflict and its concomitant circumstances and shocks. An attempt is made to identify similarities and differences in how households experience and respond to different sources of vulnerability. Section 3 provides an overview of the potential role of public policy interventions in protecting households from multiple shocks, and makes a case for a deeper understanding of how such interventions may be affected by pervasive violence and insecurity.
Year: 2013 HiCN Working Paper No. 136