DEFINITION AND TYPES OF DEFINITION AND TYPES OF SHOCKS ANDSHOCKS ANDSHOCKS AND SHOCKS AND

COPING STRATEGIESCOPING STRATEGIESCOPING STRATEGIES COPING STRATEGIES TO BE MONITOREDTO BE MONITORED

PEP-CBMS Network Coordinating Team

Technical Workshop on “Monitoring Household Coping Strategies during Complex Crises”

Sommerset Millennium HotelMarch 21, 2011

OUTLINE OF PRESENTATION

SHOCKS, COPING STRATEGIES, & , ,RECOVERYI. DefinitionII. NatureIII TypologyIII. TypologyIV. Empirical literatureV. What info to collect

DEFINITION OF SHOCK IN LITERATURE

1. Shock is an event that can trigger decline in ll b h h ff d d lwell-being, which can affect individuals

(illness, death), a community, a region, or ( l deven a nation (natural disaster, macro-

economic crisis). (World Bank, 2000-01)2. When a risk materializes, it can become a shock,

whereby a shock refers to a risk that causes a “significant” negative welfare effect (e.g., major income loss, or major illness related costs). (Heitzmann, Canagarajah, & Siegel, 2002)

DEFINITION OF SHOCK IN LITERATURE

3. Shocks are events that can reduce group or3. Shocks are events that can reduce group or individual well being, such as illness, unemployment, or drought, and which may p y , g , ythemselves cause or compound poverty. (Marques, 2003)

4. The manifestation of risk (as a shock) also leads d bl lf (to undesirable welfare outcomes. (Hoogeveen, Tesliuc, Vakis, & Dercon, 2005)

DEFINITION OF SHOCK IN LITERATURE

5. Shocks refer to the realization of different states of the world. Examples of shocks include the

f th k b t ti loccurrence of an earthquake, substantial movement in terms of trade, or the death of a household member (Kozel Fallavier & Badianihousehold member. (Kozel, Fallavier, & Badiani, 2008)

DEFINITION OF SHOCK

Shock-Refers to an actual eventl i d-May result to income and non-income losses for household co e osses o ouse o d-Associated with uninsured risk

NATURE OF SHOCKS

Shocks are distributed across space and time.Frequencycommon <-----> rareDuration

ff < > i t tone-off <-----> persistentIntensityild < > t t himild <-----> catastrophicIdiosyncrasy

limited < > widespreadlimited <-----> widespread

TYPOLOGY OF SHOCKSShocks are typically classified based on scope or origin. g

S co pe Id i os ync ra ti c M i cr o

C ovar ia n t M e s o

M a cr o

Idiosyncratic shocks affect individuals orM a cr o

households. On the other hand covariant shocksaffect groups of household, communities, regions oreven entire countries. Sh k b l h l h l d i lShocks can be natural, health-related, social,economic, political, or environmental.

SHOCKS ACCORDING TO SCOPEIdiosyncratic shocke g Covariant shocke ge.g.-illnessinjury e.g.-armed conflictfinancial crisis-injury-deathjob loss -financial crisis-changes in food pricesdrought-job loss-crop failure-loss of transfers -drought-flood-social unrest-loss of transfers -social unrest

SHOCKS ACCORDING TO ORIGINNatural shocke.g. Economic shocke.g.-flood-drought-typhoon/cyclone -business closures-mass layoffs-price increasestyphoon/cyclone-earthquake-volcanic eruptiontsunami

price increases-job loss-wage cutsloss of remittances-tsunami -loss of remittancesSocial shock Health shocke.g.-civil unrest-war e.g.-serious illness-injury-crime-eviction-violence -deathviolence

DEFINITION OF COPING IN LITERATURE1. Coping is defined as a short-term strategy

adopted within the prevailing value systemadopted within the prevailing value system to avert a negative effect on the actor. (Davies 1993 & Gore 1992 in Sauerborn(Davies, 1993 & Gore, 1992 in Sauerborn, 1996)

2 Coping is an array of short term strategies2. Coping is an array of short-term strategies adopted in response to crisis. (Davies, 1993 in Adams et al 1998)in Adams et. al, 1998)

3. Coping strategies or mechanisms are di l i d k b lremedial actions undertaken by people

whose survival and livelihood are i d h d (WHO 1998)compromised or threatened. (WHO, 1998)

DEFINITION OF COPING IN LITERATURE

4. Coping strategies refer to all strategically p g g f g yselected acts that individuals and households in a poor socio-economic situation use to prestrict their expenses or earn some extra income to enable them to pay for the basic p y fnecessities and not fall too far below their society’s level of welfare. (Snel & Staring, y f f ( g,2001)

DEFINITION OF COPING IN LITERATURE

5. Coping strategies are strategies designed to relieve the impact of the risk once it has occurred. (Holzmann, 2001)

6. Coping means the managing of resources in6. Coping means the managing of resources in difficult situations. It includes finding ways to solve problems, to handle stress or toto solve problems, to handle stress or to develop defense mechanisms. (Bhrami & Poumphone, 2002)Poumphone, 2002)

DEFINITION OF COPING

Coping mechanism or strategyp g gy

-Pertains to a reaction triggered by an adverse eventan adverse event-Can be characterized as a

calculated and rational moveIntended to minimize impact of-Intended to minimize impact of shock on wellbeing

NATURE OF COPINGCoping strategies are complex set of behaviors

Dependent on exogenous and endogenous factorse.g., household characteristics, previous experience, local economy, infrastructure, and knetworksFiniteb h h ld d t-because household resources and assets are limitedSequenced in Corbett (1988) Sauerborn Adams &Sequenced, in Corbett (1988), Sauerborn, Adams, & Hien (1996), Adams, Cekan, & Sauerborn (1998)-coping strategies follow a general order in terms p g g gof adoption

MODEL OF FACTORS THAT INFLUENCE HOUSEHOLD COPING

Lifted from Adams Cekan & Sauerborn (1998)Lifted from Adams, Cekan & Sauerborn (1998)

SEQUENCING OF HH COPING RESPONSES

Adapted from USAID Food Security & Early Warning Vulnerability Assessment Manual (1999)

TYPOLOGY OF HH COPING RESPONSES…in terms of SEVERITY

1st. Non-erosive copingb i 2nd. Erosive

copingb i ith 3rd. Failed copingh li-borrowing-reduction in foodconsumption -borrowing withexorbitant interestsale of productive -heavy reliance on dole-outs-out-migrationconsumption,-substitution ofcheaper food, -sale of productiveassets (e.g., farmanimal, land, or out migration-prostitution-stealingcheaper food, -cut in non-essentialexpenses animal, land, ortools), -bonded labor g-beggingp-sale of non-productive assets arrangements,-child labor

Adapted from WHO (1998)

TYPOLOGY OF HH COPING RESPONSES…in terms of RESOURCE UTILIZATION1. Use of internal household resources Mingione (1987)1. Use of internal household resources2. Mobilization of external resources Mingione (1987)

in terms of INTENSITY of use of household…in terms of INTENSITY of use of household human, physical, financial and social capital

Lokshin & Yemstov (2001)1 Active strategies Lokshin & Yemstov (2001)1. Active strategies2. Social net strategies3. Passive responsesp1 Limiting household expenses…combination of RESOURCE TYPE and INTENSITY OF USE

Snel & Staring(2001)1. Limiting household expenses2. Intensive use of household resources3. Market-based strategies Snel & Staring(2001)3. Market based strategies4. External assistance from

DEFINITION OF RECOVERY IN LITERATURE

1. a sustainable return to a pre-crisis1. a sustainable return to a pre crisis situation;

2 i t th i i it ti2. improvement on the pre-crisis situation; or3. improvement on the pre-crisis situation p p

along with measures to reduce and prepare for future risk and increaseprepare for future risk and increase resilience.

Lifted from WFP document on UPDATE ON THE FINANCIAL FRAMEWORK REVIEW: PROGRAMME CATEGORIES (2010)

EMPIRICAL LITERATURE- Barrientos (2007) summarized the fast growing literature on vulnerability and well-being into 3literature on vulnerability and well being into 3 thematic groups:a. direct effects of shocks on well-beinggb. role of buffers against shocksc. household response to shocks and its indirect peffects on well-being- …individual and household coping during crises is

iti l b t d t di d i (R ki &a critical, but understudied issue (Rankin & Aytac, 2009)- new modules on shocks and risks have been- …new modules on shocks and risks have beenincluded in a handful of household surveys (Cafiero & Vakis, 2006)(Cafiero & Vakis, 2006)

TRANSMISSION MECHANISMS

- According to Lustig & Walton (1999) macro Fuentes & Seck (2007)id ifi d i iWalton (1999), macro-economic shocks are transmitted to identified tranmissionchannels of climate-relatedh k t h h ldhouseholds and communities through four mechanisms: shocks to householdsnamely:1 d th d di bilitfour mechanisms:1. labor demand2 prices 1. death and disability2. sudden loss of income3 depletion of assets2. prices3. public spending cuts4 changes in assets 3. depletion of assets4. loss of public infrastructure5 macroeconomic effects4. changes in assets 5. macroeconomic effects

INTERPLAY OF SHOCKS AND COPING STRATEGIES

Adapted from World Bank (2011)

STYLIZED DEPICTION OF HOUSEHOLD WELFARE OVER TIME

Adapted from Glewwe & Hall (1998)Adapted from Glewwe & Hall (1998)

EXAMPLES OF SHOCK, COPING STRATEGY, RECOVERYSHOCKJob loss COPING STRATEGY RECOVERYGot new jobJob loss STRATEGYLook for job Got new jobSHOCK COPING STRATEGY RECOVERYSHOCKFood price increase COPING STRATEGYReduced number of meals RECOVERYIncrease in per capita foodincrease of meals capita food consumptionSHOCK COPING RECOVERYSHOCKCrop failure COPING STRATEGYBorrowed money RECOVERYBumper harvest &Borrowed money harvest & loan paymentp y

CAPTURING RECOVERY INFORMATION

CAPTURING RECOVERY INFORMATION

WHAT INFORMATION TO COLLECT

What types of shocks to capture?yp pWhat coping strategies to collect?What coping strategies to collect?Is information on recovery useful toIs information on recovery useful to gather?

Thank You!

PEP-CBMS Network Office (Asia)Angelo King Institute for Economic and Business StudiesAngelo King Institute for Economic and Business Studies

10th Floor, Angelo King International Center, Estrada corner Arellano Streets, Malate, Manila

Telefax (632) 5262067/ 5238888 loc. 274

Email at: cbms@dls-csb.edu.ph;cbms.net@gmail.com

Website: www.pep-net.org

THE CONTINUUM OF COPING

Adapted from Adams Cekan & Sauerborn (1998)Adapted from Adams, Cekan & Sauerborn (1998)