This document summarizes a study on poverty transitions in rural Bangladesh between 1996-97 and 2006-07. It finds that while poverty declined substantially over this period, some households remained chronically poor. Initial characteristics like education levels and assets affected poverty status, as did common shocks like illness and death of earners. Life histories revealed that dowry payments combined with health expenses sometimes pushed households into chronic poverty. The study concludes there is still work to do in increasing education, building assets, and providing protection from risks like illness through mechanisms like microinsurance.

1. Poverty transitions, shocks, and
consumption in rural Bangladesh,
1996-97 to 2006-07
Agnes Quisumbing
Poverty, Health, and Nutrition Division
International Food Policy Research Institute

2. Introduction
• Bangladesh → impressive reductions in poverty in the
last decade
• Population living in poverty: fell from 51% in 1995 to
40% in 2005 (BBS 2006)
• Substantial improvements in non-monetary indicators
of the poorest (Sen and Hulme, 2006).
• However, more than 36 million people live below the
food poverty line (BBS, 2006)
• Reducing poverty—and lifting the extreme poor out of
poverty—remains a major development challenge

3. Casual observation suggests that there have been
many changes over the past decade…

4. And some of these changes are more subtle…but
quite important

5. Some individuals/households have clearly been
able to move out of poverty, and others, not.
Why are some people
still in poverty, while
others been able to
move out?

6. Understanding poverty dynamics in rural
Bangladesh
We use data from the CPRC-DATA-IFPRI longitudinal
study (1996/97 to 2006/07) to:
– estimate poverty transition categories (chronic poor, moving
up, falling into poverty, never poor)
– analyze the determinants of belonging to a given poverty
transition category
– analyze the determinants of per capita consumption
We take into account the role of initial household
characteristics and shocks
We also draw on qualitative work undertaken prior to the
survey, and after the survey, to enrich our interpretation of
results
Data available at: http://www.ifpri.org/dataset/chronic-poverty-and-long-term-
impact-study-bangladesh

7. Poverty and poverty transition categories
Agricultural technology
(1996-2006)
Poverty headcount
Poverty in baseline survey 62%
Poverty in 2006/2007 13%
Poverty transitions
Chronic poor 11%
Falling into poverty 2%
Moving out of poverty 51%
Never poor 36%

8. Initial household characteristics affect chronic
poverty and hh consumption
• The probability of chronic poverty is negatively
associated with schooling & the value of non-land
assets
• Higher proportions of young children and older
people are also associated with being chronically
poor and lower per capita consumption

9. Most common shocks experienced by households
over the last 10 years, 1996-2006

10. Shocks also affect chronic poverty and household
consumption
• Death of the main income
earner and illness-related
income loss have the
biggest negative impact
on per capita
consumption
• Floods are not significant
—possibly because of
effective emergency
assistance mechanisms

11. The double whammy
Life histories interviews are useful
both for triangulating the poverty
transitions observed in the
household survey data and for
understanding the drivers of
consumption changes and
movements into and out of poverty.
Life histories showed that the
combination of dowry expenses
and illness expenses (associated
with aging parents) pushed
households into chronic poverty

12. Policy implications--1
• Need for policy interventions to increase
access to and improve quality of
education
• Need to provide poor with opportunities to
build up and trade up assets and protect
asset base from shocks
• Required protection from shocks may
differ for men and women: women’s
assets tend to be drawn down by illness
shocks

13. Policy implications--2
• How to address issue of dowries and illness shocks
• Addressing dowries is controversial, although worldwide
dowries have tended to decline as investments in girls’
human capital increase (can we wait?)
• Providing instruments to cope with illness is less
controversial (microinsurance)
• NGOs and civil society organizations may pave the way
in changing gender norms around dowries, and in
providing ways to manage risk