Vulnerability to Poverty in Fiji

In the extant literature either income or consumption expenditures as measured
over short periods of time have been regarded as proxies for the material well-being
of households. However, economists have long recognized that a household’s sense of
well-being depends not just on its average income or expenditures, but also on the
risks it faces. Hence vulnerability is a more satisfactory measure of welfare. In this
paper we measure the extent of vulnerability as expected poverty, and examine the
importance of its determinants, on the basis of a household survey for Fiji. We find
that in Fiji, vulnerability (and poverty) is largely a rural phenomenon. Moreover, the
distribution of vulnerability across different segments of the population can differ
significantly from the distribution of poverty. In addition, there is a sizable fraction of
the population Fiji observed to be non-poor but estimated to be vulnerable to poverty.
Thus, poverty reduction strategies in Fiji need to incorporate not just alleviation
efforts but also prevention.