Health and vulnerability to poverty in Ghana: evidence from the Ghana Living Standards Survey Round 5

BACKGROUND: An understanding of the complex relationship between health status and welfare is crucial for critical policy interventions. However, the focus of most policies in developing regions has been on current welfare to the neglect of forward-looking welfare analysis. The absence of adequate research in the area of future poverty or vulnerability to poverty has also contributed to the focus on current welfare. The objectives of this study were to estimate vulnerability to poverty among households in Ghana and examine the relationship between health status and vulnerability to poverty. METHOD: The study used cross section data from the Fifth Round of the Ghana Living Standards Survey (GLSS 5) with a nationally representative sample of 8,687 households from all administrative regions in Ghana. A three-step Feasible Generalized Least Squares (FGLS) estimation procedure was employed to estimate vulnerability to poverty and to model the effect of health status on expected future consumption and variations in future consumption. Vulnerability to poverty estimates were also examined against various household characteristics. RESULTS: Using an upper poverty line, the estimates of vulnerability show that about 56% of households in Ghana are vulnerable to poverty in the future and this is higher than the currently observed poverty level of about 29%. Households with ill members were vulnerable to poverty. Moreover, households with poor hygiene conditions were also vulnerable to future poverty. The vulnerability to poverty estimates were, however, sensitive to the poverty line used and varied with household characteristics. CONCLUSION: The results imply that policies directed towards poverty reduction need to take into account the vulnerability of households to future poverty. Also, hygienic conditions and health status of households need not be overlooked in poverty reduction strategies.