Risk attitudes, vulnerability, and multidimensional poverty of rural households in Vietnam

Abstract

The study applied simultaneous equations by using 3SLS regression to estimate the relationship between multidimensional poverty, vulnerability, and risk attitude. It is based on the Vietnam Access to Resources Household Survey 2018. The Alkire– Foster method is used to measure deprivation scores in multidimensional poverty while measuring Household Vulnerability Index (HVI) was developed by FANRPAN (2011). Five major components were included: natural assets, physical assets, financial assets, human assets, and social assets. The results show that the majority of rural households had a moderate vulnerability, comprising 85% of observed households in the whole country and five regions. The North Central and South- Central Coast ranked first in terms of high vulnerability, comprising 16.6% of the total households in such region. Results show that the households’ deprivation scores fluctuated from 0 to 0.611, with 7.88% of households being multidimensionally poor. Most multidimensionally disadvantaged households are concentrated in the South, including the Mekong River Delta and Central Highlands. The results showed that the households receiving disaster assistance had a reduction in deprivation scores in multidimensional poverty. In general, most households are more vulnerable in terms of natural assets and physical assets, and less vulnerable in terms of human and social assets. The research results indicate that there is a two-way causal relationship between deprivation scores in multidimensional poverty and household vulnerability index (HVI), with a positive relationship and significance at 1%. An increase in HVI causes an increase in household's deprivation scores, hence, it increases the likelihood of falling into multidimensional poverty. In contrast, vulnerability is linked to poverty. In fact, the poorer households, with higher scores in deprivation, were more vulnerable.