Vulnerability and Poverty in Bangladesh

This study estimates ex ante poverty and vulnerability of Bangladeshi households using Household Income and Expenditure Survey (HIES) data in 2005. It also suggests policy options that the government can adopt to reduce poverty and vulnerability. Study results show that poverty is not the same as vulnerability. Understanding the risk-poverty linkage will highlight key micro-level binding constraints to poverty reduction. Findings include:

• Substantial share of those currently above the poverty line are highly vulnerable to future poverty;
• Agricultural households or those without education are likely to be the most vulnerable;
• Geographical diversity of vulnerability is considerable. 

The paper suggests that ex ante measures to prevent households from becoming poor as well as ex post measures to alleviate those already poor should be combined in evaluating poverty. Other recommendations include:

• Consider diverse nature of poverty and vulnerability in designing policies;
• Give priority to reduction of consumption fluctuations and building up assets for the chronically poor;
• Combine protective programs with promotional programs;
• Help poor households build up assets by smoothing income, enabling purchase of productive assets and protecting against crisis through microcredit programs.