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Published on March 23, 2015

Two steps back: How low income Kenyans think about and experience risk in their pursuit of prosperity

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Summary

The climb out of poverty is seldom a smooth one. Life rarely bestows good fortune evenly and persistently over a lifetime. Given their limited capacities to cope, low income people can experience major setbacks when hit by what are seemingly even small shocks and can experience serious losses of wealth and welfare when the big ones strike. And merely the specter of shocks can lead to underinvestment that makes even a smooth climb out of poverty take much longer than it might.

This paper explores how low income respondents in the Kenya Financial Diaries think about, experience, and prepare for risks in their lives. Ways that risk reduction and management interventions could reduce their vulnerability in important ways. This analysis draws on data and insights from the Kenya Financial Diaries project, which tracked 300 households’ cash flows, contextualized in their larger life histories and supplemented with a specific risk-related survey.

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