Considerations of risk and vulnerability are key to understanding
the dynamics of poverty in rural Malawi. This
study measures vulnerability to consumption shortfalls and
analyzes its sources using a two-period panel of 2,789 households,
drawn from the 2010 Third Integrated Household
Survey and the 2013 Integrated Household Panel Survey.
The results show that in 2010 two-fifths of all households had
a chance of at least 40 percent of falling below the poverty
line in the future. The results show that many households
in rural Malawi are vulnerable to poverty, although, as with
many other studies of rural areas in other countries, much of
the vulnerability is caused by chronic poverty. Nonetheless,
risks, particularly rainfall and loss of off-farm employment,
are also important in explaining why poor households
remain poor, and why some non-poor households are more
likely to fall into poverty in the next period. Household
wealth and agricultural assets can protect households from
falling into poverty and reduce the severity of the fall when
shocks occur. However, there is little evidence to suggest
that other strategies to reduce vulnerability are effective.