Consumption smoothing in the Zone Lacustre, Mali

This paper examines consumption smoothing in the Zone Lacustre, Mali, a poor region in one of the poorest countries in the world. Idiosyncratic shocks appear to have little impact on consumption. A stronger test of consumption smoothing shows that controlling for covariate shocks, changes in household income lead to modest changes in consumption. These results are robust to concerns regarding bias resulting from measurement error or endogeneity of changes in income. Although there is no one single response, in general non-poor households are more likely to enter into new income generating activities given these shocks while poor households are more likely to engage in gift exchange or to ration consumption.