Shock responses: exploring household selection into poverty-reinforcing actions in Malawi

We examine how households responded to shocks (such as floods) in Malawi from 2003 to 2020. We find that rural households and those with lower education levels are more likely to respond to shocks in ways that reinforce poverty cycles, such as by selling productive assets. Our findings are nuanced; while rural households are 2 percent more likely to adopt poverty-reinforcing responses in general, they are 5 percent less likely to reduce food expenditure (a specific poverty-reinforcing response). We also find that the type of shock influences shock response selection: systematic shocks are 12.3 more likely to illicit poverty-reinforcing responses. We identify three mechanisms driving our results: awareness, availability and affordability. Households take poverty-reinforcing coping strategies when they are not aware of better options that are available and affordable.