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2.
Literature Review
2.1 Introduction
The concept of poverty has evolved over time and was recently
described as a multidimensional phenomenon by Sen (1981), under
which it does not solely depend on the income but also other basic
necessities of life, such as access to education, nutrition and health
services. In their work on poverty and vulnerability, Philip & Rayhan
(2004) talk about how the concept of poverty progressed after the
integration of the non-monetary aspects to the definition of the
concept.
Economists have long recognized that, under the assumption that a
household is risk averse, its sense of well-being depends not just on its
average income or expenditures, but also on the risks it faces. Before
relevant empirics and their findings are discussed, it is imperative that
the basics and germane definitions are highlighted. Internationally
available literature has taken into account the definitions in different
contexts with particular reference to the geography and the area of
research.
Unlike poverty, the concept of vulnerability has always been viewed as
a dynamic one, which identifies change, despite poverty being inert, as
seen in the work of Moser (1998). Holzmann & Jorgenson (2001)
defines vulnerability as the risk that an individual may take, which
would lead them to fall below the poverty line; nevertheless, in the
case of those who are already under the poverty line, it may cause
stagnancy or a decrease in their respective poverty status. This
definition was also endorsed and used by Heitzmann, Canagarajah &
Siegel (2002). Similarly, Scaramozzino (2006) referred to his definition
as
theoutcome
approach.
Under
his
definition
he
stated
that
vulnerability may be considered as the peril that a household or a

society, at large, will take, which would lead to a decrease in their
respective poverty status, those if non-poor, may fall below the
poverty line and those if poor, may become poorer. Hence, the concept
is synonymous with a higher possibility of becoming poorer tomorrow,
than you are today.
While discussing the utility approach for vulnerability, he states that it
is the forgone utility as a result of the risk taken, in order to smooth the
consumption of the household. The concept was endorsed by Ligon
and Schechterd (2003), as they decomposed the utility function into
poverty and vulnerability. Apart from the endorsement, they pointed
out that the expected poverty status or future likelihood of poverty of a
household, has the obstinate implication that upsurges in risk would
reduce the vulnerability level of those with mean consumption levels
below the poverty line. We should be concerned about vulnerability
because if policymakers design poverty alleviation policies in the
current year on the basis of a poverty threshold of income or
consumption in the previous year, the poor who receive income

support may have already escaped from poverty and the non-poor
who do not receive such support may have slipped into poverty due to
various unanticipated shocks.
In his extensive work on deriving the link between the two
aforementioned
concepts,
Chaudhri
(2003),
highlighted
the
significance of vulnerability. It was stated that it was important to study

vulnerability to improve the policy interventions by the government for
the improvement of well-being and living standards, as poverty alone,
is not an appropriate enough measure. It serves as a tool for the pre
and post assessment of the poverty alleviation programs and schemes,
whereby it can make the aforementioned schemes more relevant and
efficient. Moreover, it helps in identifying the sources of poverty, in
order for the efficient mitigation of risk to occur.
Analysis of vulnerability shows and allows us to establish a link
between the type of risks that a household may face and their
corresponding mitigation strategy. Temporary poverty can be dealt with
the
provision
of
aid
and
assistance
nevertheless,
to
address
vulnerability we need strategies like prevention, mitigation and coping

arrangements. This was concluded by Azan & Imai (2009) in their
study.
2.2
International
Empirical
Evidence
and
the
Social
Vulnerability Index
Internationally, there exists a vast amount of literature which studies
the
links
between
poverty,
vulnerability
and
its
determinants.
Interesting to note, was the fact that most studies, that were reviewed,
presented forth the replication of the model presented by Chaudhri
(2003), whereby he stated that poverty and vulnerability to it, were
merely two sides of the same coin. In the empirical explanation of
vulnerability, he expressed vulnerability as the expected poverty and
used a pre-determined poverty line, moreover added the poverty index
in binary form, making his model different from that presented by
Foster, Greere & Thorbeck (1984), in their study of family poverty
measures. Chaudhri lists down that a major problem with his presented
model is that it allows for heteroskedasticity to occur and hence
resulting in a loss of efficiency.Seeing the concept theoretically, one
can judge that the presence of risks may affect the decision making of
a household. For example, on whether to adopt a new agricultural
technology or whether to have more children in an effort to mitigate
future income generation risks. Thus, to address poverty reduction as a
goal, as a policy implication, we can see that public policies should not
only highlight poverty alleviation interventions to support those who
are identified as the poor ex post, but also the poverty prevention
interventions to help those who are poor ex ante, that is, prevent those
who are vulnerable to shocks not to fall into poverty
Using the similar definitions and models as reviewed above, Kamanou
& Morduch (2002), suggested a non-parametric method for the
estimation of the future consumption and its distribution pattern,
whereby they made use of a Monte Carlo design for simulation of the
said activity and hence studied the patterns for estimation, which
resulted in the results being very promising. In their results, they found
out that when people are deficient in their means to smooth
consumption in the face of variable incomes, they are often imprisoned
in poverty through their attempts to steer clear of irreversible shocks
Hoddinott and Quisumbing (2003 and 2003a) recognized the different
approaches to poverty, which could be made use of in order to
measure vulnerability. The three approaches were expected poverty,
low expected utility and uninsured exposure to risk, where vulnerability
could be assessed by substituting it as either one of the mentioned
approaches in order to be assessed.
As mentioned earlier, region and country specific studies have been
conducted earlier with reference to this topic at hand, one of the
prominent studies to mention here is that of Jha & Dang (2009). In their
work, the authors made use of all three approaches of poverty, to
assess vulnerability in Central Asian Republics, namely Azerbaijan,
Kazakhstan, Tajikistan and Kyrgyzstan, where there was estimated that

an aggregate of almost 80% of vulnerability to poverty existed, despite
the relatively lower number of poverty estimates.
Abuka, et al (2009) in their study discussed particularly, the case of
Uganda, an agrarian economy like Pakistan. This paper used Ugandas
national food intake as a measure of poverty and seemed of
importance to our study because of Uganda and Pakistans economic
and demographic similarities. In this paper, Abuka used logistic
regression in order to estimate the effect of the independent variables
on the vulnerability to poverty. Poverty lines were derived separately
for the different regions of Uganda; north, western, central and
eastern, moreover, agricultural zones were also divided into nine
different zones, depending on the major crop or the principal produce
of the respective zone. Other major variables included household size,
household income, proper access to lighting and closeness to market.
The results in general indicated that a one percent increase in mean
crop income reduced the probability of being in poverty by about
0.008.
Similarly, Ding, et al (2007), presented forth the case of a small
Chinese village called Hubei, by decomposing household poverty into
chronic and transient components and later using Censored Quintile
Regression to further investigate the determinants and their respective

roles.
With special reference to the sub-Saharan region, Edoumeikumo &
Karimo (2013) too made use of a logistic regression model to find out
the determinants of vulnerability of a household to poverty in Nigeria.
Using the data set, the authors concluded that almost 60% of the
population was vulnerable to poverty, out of which more than 50%
lived in the urban regions. The paramount finding of this paper
however was that a Nigerian household was more risk-averse if headed
by a lesser educated male. Which entailed that a household head that
lacked the socioeconomic necessities was more likely to fall in poverty,
than the one that didnt.
Similarly, any household in Ethiopia was
greatly risk-averse if headed by a female, as shown by Muleta &

Deressa (2014).
Many researchers suggested variations to the conventional research
model being used in majority of the studies. Jacoby & Skoufias (1997)
suggested that inclusion of median level groups may lead to better
results. They also stressed upon the fact that addressing vulnerability
has influential value. Because of the many risks households face, they
often experience shocks leading to a wide variability in their earnings.
In
the
absence
of
sufficient
assets
or
insurance
to
smooth
consumption, such shocks may lead to irreversible losses. From the
literature, normally, the median level income groups are often not
included. Inclusion of them may result in the aforementioned and they
may suffer losses like distress sale of productive assets, reduced
nutrient intake, or interruption of education that permanently reduces
human capital, locking their victims in perpetual poverty and giving no
way back. Knowing of such outcomes, the vulnerable get involved in
risk mitigating strategies to decrease the possibility of the occurrence
of such events, however the returns to these are mostly low.
Meanwhile Guillaumont, et al. (2014) suggested and stressed upon the
inclusion of natural shocks, such as climatic disasters and illnesses to
achieve efficiency and practicality. In this paper, however, it has been
noted that macro-level economic growth decelerates because of the
plunging risks, which are resultants of climatic calamities, trade and
political instability. Hence, the policy implementation is exclusive to the
reduction of vulnerability, moreover, is pertinent to the reduction of
poverty as well.
As our study is based on the Social Vulnerability Index and its
application, it is only just if the index, its evolution, construction,
theory and methodology, used by numerous different researchers
discussed as much as the vulnerability to poverty and its results, as in
the aforementioned, if not more. As the concepts of poverty and
vulnerability have been discussed in detail above, we believe they
strongly provide a foundation for the understanding of the need of this
particular index and its background, therefore, further onwards, the

focus of this review has been limited particularly to the Social
Vulnerability Index, as it is imperative to study and analyze the
theoretical
footing
of
what
our
study
is
concentrated
upon.
Unfortunately, not much work has been internationally or even

nationally in Pakistan, on the social vulnerability index, but we have
comprehensively reviewed the works relevant to it and regarding it,
which assisted us in achieving our set goal in an efficient manner.
In one of the most comprehensive and significant works on this index,
St. Bernard (2004), suggested that a social vulnerability index may be
constructed
and
laid
down
its
theoretical
and
methodological
considerations. This paper signifies vulnerability as a fundamentally

multi-dimensional
and
multi-faceted
concept,
comprising
of
essentially economic, ecological, social and environmental dimensions.

Most studies done previous conveniently ignored the social aspect,
while including others, in this study; the author argues that the social
aspect may be the most important one, which remained eluded in the
light of economic and environmental facets.
It is further argued that in order to include the aforementioned social
aspect, the development of a paradigmatic framework is pertinent,
which would further analyze the status of vulnerability of a social
entity. This study was done by keeping in consideration the smaller
units like households, communities, counties, states and nations, of the

Caribbean region, which proves as a limitation to the application of the
economic model presented, to other regions of the world.
In the paper, the author conducted a SWOT analysis of the different
indicators that may be included in the vulnerability index and
established a model, which was kept open for empirical analysis,
because of the unavailability of data sources to the author.
The important indicators that constructed the social vulnerability index
included,
(1) Education, (2) Health (3) Good governance, Social Order and
Security, (4) Resource Allocation and (5) Communications technology,
whereby scoring was done with respect to each variable, constituting
the indicator, in order to decide the rank of a particular household,
community and/or province in the Caribbean region, on the social
vulnerability index in order to decide the extent of the vulnerability to
poverty of each of the aforementioned.
Schmidtlein, et al (2008), however mastered the social vulnerability
index, by empirically analyzing it, by extending St. Bernards study, but
was however limited to certain regions of the United States of America,
only, which presented a comparison between different geographic
regions.
2.3 Empirical Evidence from Pakistan

After extensive research, prior to the decision of a motion for this
dissertation, we concluded that work on vulnerability and poverty has
been done in different parts of the world but a study related to Pakistan
about this, is yet to be done. In a country like Pakistan, it is important
to work on the determinants of vulnerability to poverty as it will help us
design different policies for different groups of people. By targeting the
people who are facing risk, we can help them from falling below the
poverty line.
Furthermore, this study will also provide a district-wise and a provincewise comparative analysis with respect to the vulnerability to poverty,
which will make the policy redesign and implementation, easier and
more efficient.
Therefore, it can be safely stated that this dissertation is the first of its
kind in Pakistan and will be the first time work on vulnerability to
poverty is being done with particular reference and focus to Pakistan.

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2.

vulnerability may be considered as the peril that a household or a

consumption in the previous year, the poor who receive income

significance of vulnerability. It was stated that it was important to study

vulnerability we need strategies like prevention, mitigation and coping

Kazakhstan, Tajikistan and Kyrgyzstan, where there was estimated that

Regression to further investigate the determinants and their respective

Similarly, any household in Ethiopia was

greatly risk-averse if headed by a female, as shown by Muleta &

consumption, such shocks may lead to irreversible losses. From the

particular index and its background, therefore, further onwards, the

Unfortunately, not much work has been internationally or even

considerations. This paper signifies vulnerability as a fundamentally

essentially economic, ecological, social and environmental dimensions.

units like households, communities, counties, states and nations, of the

2.3 Empirical Evidence from Pakistan

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