Income smoothing and consumption smoothing

Article Abstract:

Developing countries have ways in which farm and other households may self-insure. Recent work on risk and credit suggests that there remains loopholes in effective insurance and credit markets, particularly for the poorest households. The existing means of dealing with risk can be very costly for these households. Risk can be dealt with by smoothing household income, by making conservative production or employment choices and expanding economic activities. Consumption can be smoothened by households, by borrowing and saving, reducing and accumulating nonfinancial assets, adjusting labor supply and utilizing formal and informal insurance methods.

Credit

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Consumption insurance: an evaluation of risk-bearing systems in low-income economies

Article Abstract:

Better insurance can result in remarkable improvement in the condition of farmers of developing countries. People in villages of India or Ivory Coast who have low per capita income are faced with risks such as illness, crop failure and erratic monsoons, thus necessitating improved insurance. Those having facilities of improved financial systems can utilize credit and insurance to diversify risk to increase levels of income, consumption and savings. A theoretical framework tests the degree of consumption smoothing.

Insurance, Farm income

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Symposium on consumption smoothing in developing countries

Article Abstract:

The symposium reveals the progress in applied and theoretical work in smoothing of consumption for the third world. Contract theory, mechanism design and information economics have enlightened development economics in the 1990s. The mechanisms of consumption smoothing and risk sharing have given ample scope for testing model predictions, and will help in future analyses.

Agriculture, Agricultural economics

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