Citation

Bundervoet T. World Dev. 2010; 38(7): 955-965.

Copyright

(Copyright © 2010, Elsevier Publishing)

DOI

10.1016/j.worlddev.2009.12.007

PMID

unavailable

Abstract

This article examines the relation between risky assets and activity choices in rural Burundi. The literature says that when assets are risky, their effectiveness as a buffer is eroded. A corollary of this is that even wealthier households will engage in income-skewing activities. Exploiting the differential degree in asset risk related to the spatial intensity of the civil war, we find that higher asset holdings do not induce households in the war regions to reduce investment in safe low-return activities--as opposed to households in other regions. This potentially explains (in part) the massive increase in poverty in the war regions.