Monday, May 18, 2009
Survivalists experience a revival these days as all sorts of doomsday scenarios circulate. But even if we are to experience and economic meltdown, it does not compare to natural disasters in developing economies. How do people cope when there is no financial or insurance market to help you out when you are in dire straits. Looking at Bangladesh, Ethiopia and Malawi, Futoshi Yamauchi, Yisehac Yohannes and Agnes Quisumbing show that individuals with better nutrition and human capital fare better. While self-insurance in financial assets is not possible, one can invest in biological assets. Good nutrition allows you to make it physically through bad times, and education allows you to transfer wealth through time, wealth you cannot lose to a disaster or to robbers, and it is very protable should you have to move. Note that the latter in not limited to oneself, but extends to one's children, as they can help out as well.