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Poor households in rural Bangladesh often face concurring idiosyncratic and aggregate shocks, which have adverse impacts on their income and consumption. In this study, we investigate the transmission channels, coping responses, and economic consequences of different shocks including idiosyncratic adverse health events and aggregate agricultural productivity shocks. We use a balanced panel data of 5,655 rural households - interviewed every year between 2010 and 2013 - in northern Bangladesh. We estimate the effects of adverse health shocks on the consumption levels of poor households in a multi-shock framework. We take advantage of the panel data and use fixed effect models to control for unobserved household-level confounders and potential endogeneity. We further examine effects of shocks to agricultural wages on consumption using rainfall as an instrument. We further carry out a number of robustness checks to understand how sensitive our models are to different alternate specifications. Results indicate that households smooth their consumption after experiencing adverse health shocks, with and without the parallel incidence of other types of shocks. Consumption smoothing occurs despite households experiencing a significant decrease of wage income, which appears to be driven by an increase in informal loans from money lenders and households' social networks. To evaluate the effect of a different type of income shock on consumption, we use rainfall as an exogenous instrument for agricultural income. Results indicate that while higher rainfall leads to a significant increase in agricultural income, it does not translate to higher food expenditure for households. Together, these findings offer suggestive evidence that, in this setting, households appear to smooth food consumption in the face of income shocks. Poor households rely on formal and informal, potentially costly channels and exploit existing social networks to insure themselves against adverse shocks. The findings highlight the importance of developing a better framework to evaluate and implement more equitable social safety net policies. [ABSTRACT FROM AUTHOR]

Using household survey data from off-grid regions of rural Bangladesh, this study attempts to assess the impacts of mobile phone use on household welfare and women's empowerment. Using two propensity score-based weighted regressions (IPW and AIPW), this study finds that mobile phone use increases household income (3–10 percent) from different sources, such as small businesses and remittances; improves women's empowerment; and facilitates consumption smoothing during periods of shocks. Thus, favorable policies on investment in mobile telephone technologies, tariffs on talk time and internet usage, and mobile innovations, such as mobile financial services could reduce communication bottlenecks and digital divide in rural lagging regions that will help achieve a balanced regional development. Simultaneously, policies to avoid adverse impact of mobile phone usage should also be in place. [ABSTRACT FROM AUTHOR]

We test if precautionary behavior in the consumption decisions of rural households differs across the forms of savings. Using monthly panel data from Bangladesh, we find that, on average, the savings device does not matter but that the effect of income on savings indeed depends on the savings device. Precautionary savings in the form of staple grain are relatively constant across income quartiles, while nongrain precautionary savings vary across income quartiles. Previous studies, which treat these two types of savings devices as fungible, misdiagnose the reasons for, and by extension the market failures behind, a large percentage of the precautionary savings held by rural households. [ABSTRACT FROM AUTHOR]

We investigate the economic consequences of sickness and death and the manner in which poor urban households in Bangladesh respond to such events. Based on panel data we assess the effects of morbidity and mortality episodes on household income, medical spending, labor supply, and consumption. We find that despite maintaining household labor supply, serious illness exerts a negative effect on income for the poor. However, the estimates do not reject consumption smoothing. The most prominent responses to finance current needs are increasing household debt through borrowing and depleting productive assets, both of which have detrimental effects on future consumption. [ABSTRACT FROM AUTHOR]