Three essays on risk and poverty

This dissertation explores poverty and economic insecurity as determinants of health outcomes, and as contributors to vulnerability to poverty. While the literature has paid much attention to the lack of financial resources in the context of economic development, newer research stresses that poverty does not only manifest in deprivation, but also in economic insecurity and risk. Vulnerability to poverty is an important dimension of individual welfare which is commonly unaddressed by conventional measures of poverty. This dissertation (1) assesses the linkages between economic insecurity, poverty and health outcomes, and (2) provides a better understanding of the role that risk plays in the welfare loss from poverty.The first chapter examines vulnerability to poverty, i.e. the inability of individuals to cope with economic risks in an environment of deprivation in the context of South Africa. It uses a Monte Carlo bootstrap method to simulate future poverty outcomes using five waves of data between 2008 and 2017, given randomized shocks to consumption, which are drawn from the distribution of shocks across the population. This chapter finds that conventional poverty measures underestimate the number of vulnerable South Africans by 6.1 percent.The second chapter evaluates welfare losses from vulnerability using the same South African panel data. It decomposes the welfare loss into its components, namely, the welfare loss due to poverty and the welfare loss due to risk. It finds that the welfare loss from vulnerability is 25 percent, compared to the collective welfare in a situation where there is no risk and no inequality or poverty. This chapter shows that most vulnerability is due to poverty, or deprivation in consumption, confirming existing literature on the persistence of poverty.The third chapter explores the association between economic insecurity, poverty and obesity. Specifically, it connects indicators of income volatility to body mass index (BMI), and highlights the differing relationship for individuals at various income levels. Higher income volatility is related to a significantly lower BMI, but the relationship varies across different measures for income volatility and across the income distribution. Income does not seem to function as a buffer against the effect of economic insecurity on BMI, as a relationship can only be established for the better off.