DETERMINANTS OF RURAL HOUSEHOLDS VULNERABILITY TO

POVERTY IN ARBA MINCH ZURIYA WOREDA, SNNPR STATE

By: TESFAYE WAGAW

ADVISOR: FASIL E.

A SENIOR ESSAY FOR PARTIAL FULFILMENT OF BACHLOR OF ART

IN ECONOMICS

SUBMITTED TO: DEPARTMENT OF ECONOMICS

COLLEGE OF BUSINESS AND ECONOMICS

ARBA MINCH UNIVERSITY

JANUARY, 2018

ARBA MINCH, ETHIOPIA

CERTIFICATE OF EVALUATION

This is to certify that student Alemu Guyita

ID.NO RBE/070/07 has conducted his/her senior essay research paper, titled
“DETERMINANTS OF RURAL HOUSEHOLDS VULNERABILITY TO POVERTY IN
KONSO WOREDA, SNNPR STATE”

This work is completed with satisfactory evaluation of the advisor and the examiners as per the
requirements of the university.

Advisor: _________________________ Signature: _________________________.

Examiners:

1. ________________________________ Signature _____________________

2. ________________________________ Signature _____________________

3. ________________________________ Signature _____________________

Department of Economics

College of Business and Economics

Arba Minch University

June, 2017

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Acknowledgment

First and for most, I would like to thank almighty God for giving me the strength to bring my
long time dream and effort into reality. Then I would to like to express my deepest gratitude and
appreciation to my advisor, instructor Fasil Eshetu, who really sacrificed his previous time in
reading and reviewing so many drafts and final out of my work. This paper indeed, could not
have been written without unstinting and gracious support, commitment, constructive
criticisms&advice.
I am also indebted to express my thanks to my lovely mother Roba Ganbro, Guyita Geremo my
father, Geremo Guyita my brother and all my families as well as friend giving love and support
during my three years stay at under graduate school and research work.
Finally I thank all those assisted me with ideas, comments, and contacts are too numerous to
mention your names here, your countless contributions have not for gotten.

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 Table of contents

Table of Contents
CERTIFICATE OF EVALUATION............................................................................................................i
Acknowledgment.........................................................................................................................................ii
Table of contents........................................................................................................................................iii
List of table..................................................................................................................................................v
Acronyms....................................................................................................................................................vi
Abstract.....................................................................................................................................................vii
CHAPTER ONE..........................................................................................................................................1
1. INTRODUCTION...................................................................................................................................1
1.1 Background of study..........................................................................................................................1
1.2 Statement of the problem.....................................................................................................................3
1.3 Research question.............................................................................................................................5
1.4 Objective of the study........................................................................................................................5
1.5 Significance of the study....................................................................................................................5
1.6 Scope and limitation of the study......................................................................................................6
1.7 Organization of this paper.................................................................................................................7
CHAPTER TWO.........................................................................................................................................8
2. SURVEY LITERATURE........................................................................................................................8
2.1 Definition of Basic Terminologies..........................................................................................................8
2.2 Theoretical literature.........................................................................................................................8
2.2.1 School of thought and poverty...................................................................................................9
2.2.2 Poverty lines and types.............................................................................................................11
2.2.3 Setting poverty lines.................................................................................................................14
2.3. Empirical Literature Review............................................................................................................16
CHAPTER THREE...................................................................................................................................18
3. RESEARCH METHODOLOGY...........................................................................................................18
3.1 Description of study Area................................................................................................................18
3.2 Data, Source and Methods of Analysis............................................................................................19
3.3 Sampling Technique and Sampling Size...........................................................................................19

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 3.3 Empirical Model Specification.........................................................................................................20
3.3.1 The Determinants of per capita Consumption of Rural Households’........................................20
3.3.2 The Logit Model for Determinants of Vulnerability to Poverty.................................................22
3.4 Definition of variables and hypothesis.............................................................................................25
CHAPTER FOUR.....................................................................................................................................27
4. DATA ANALYSIS AND DISCUSSION..........................................................................................27
4.1Descriptive Analysis..............................................................................................................................27
4.1.1 Decomposition of poverty by some socio economic characteristics.........................................27
4.1.2 Age distribution of household with poverty status...................................................................28
4.1.3 Sex distribution of household with poverty status...................................................................29
4.1.4The distribution of family size of households............................................................................30
4.1.5 The Distribution of Land Size of Sample Households................................................................31
4.1.6 Participation in off- farming activities.......................................................................................32
4.1.8 Vulnerability of Rural Households to poverty in study area......................................................35
4.2 Estimation Results and Interpretation..............................................................................................35
CHAPTER FIVE.......................................................................................................................................40
5. CONCLUSION AND RECOMMENDATION.....................................................................................40
5.1. Conclusion......................................................................................................................................40
5.2 Recommendation............................................................................................................................41
Reference...................................................................................................................................................42
APPENDIX : Estimation result....................................................................................................................46

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 List of table
Table: 1 Decomposition of poverty by sex and education level ………………………………28

Table 2: The distribution of age of household head by poverty status ………………………….29

Table 3: Distribution of sample household by gender and poverty status ………………………30

Table 4: The distribution of family size household by poverty status …………………………..30

Table 5: The distribution of land size of household head by poverty status …………………….31

Table 6: The distribution of household by off-farming participation poverty status ……………33

Table 7: The distribution of livestock ownership of household ………………………………...33

Table 8: The ox ownership of rural sample households in study area ………………………….34

Table 9: The vulnerability of Rural household to poverty in the study area ………..………....35

Table10: Determinants of rural households poverty in the study area …………………………37

Table 11: Determinants of rural households vulnerability to poverty ………………………..…38

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Acronyms
BNS Basic Need School (Approach)

CSA Central Statistics Agency

3FGLS Three Feasible General Least Square

FEIV Fixed Effect Instrumental Variable

FGT Foster Thorn Greer Back

FIA Food Energy Intake Approach

HICES Head Counted Index Estimation Survey

KDA Konso Development Association

KDH Karat District Hospital

MDGs Millennium Development Goals

MoFED Ministry of Finance and Economic Development

OLS Ordinary Least Square

SNNPRs Southern Nation Nationalities of Peoples Regional State

SSA Sub Saharan Africa’s

VEP Vulnerability as Expected Poverty

WB World Bank

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 Abstract
This study attempted to examine determinants of rural households’ vulnerability to poverty from
single visit survey of Konso Woreda. Moreover, the study tried to find out which group of
households are more likely to poor and remains poor in the near future. To this end, primary
data would be collected from 100 households from three kebeles using two stage stratified
random sampling. Structured questionnaire would be used to gather relevant information from
sample. The study would adapt from previous studies poverty estimated 148 per month per adult
equivalence the present study would use to the poverty line of the study area is estimated 148 per
month per adult equivalent and 23% of the total population is found to poor based on bench
mark of poverty line. The 3 step FGLS estimation would be adopted to find out the incidence of
vulnerability to poverty in study area the survey shows that 10% of the population is found to
have fifty or more probability of lasting up in poverty in the next year. Additional of 33% of the
population was to be moderate vulnerable using the observed poverty rate as a threshold. From
the descriptive statistics a household headed by female, less educated and illiterate is relatively
more vulnerable to poverty. The logistic estimation result shows that vulnerability to poverty is
positively influenced by high dependency ratio, low educational attainments of head and
illiterate headiness. Two thresholds (the absolute and relative vulnerable) would employ to
categories the sample population in to vulnerable, relative vulnerable and non-vulnerable. Both
descriptive and econometrics statistics would be used to analyze the collected data. The OLS
technique would be adopted to assess the determinants of vulnerability to poverty and logistic
model used for the analysis of determinants of rural households to poverty.

The result suggest a number policies and programs that an address the most vulnerable and
reduce their probability of being poor in the future. These could summarizes appropriate
implementation of family planning, increasing non-agricultural activities and creation of
productive investment it would be essential of development policies priority the building up the
assets.

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CHAPTER ONE

1. INTRODUCTION
1.1 Background of study

The problem of poverty and how to reduce it remains the most pressing dilemma in the
international development debate. Although poverty reduction has become a central global
agenda, there is still on ongoing debate on the policies that would help to attain the objective
(Cashin et al 2001). As result poverty reduction becomes subject that has attracted serious
international discussion for more than 20 years. This evidenced by the attention poverty is
receiving in the international development debate. For example, the world development reports
(World Bank, 2001) focus on poverty. Further, in the year 2000, leaders from 189 countries
endorsed a set Millennium Development Goals (MDGs) to be achieved by 2015, one of which
was to “have” the number of people living in absolute income poverty relative to the 1990 levels
(Maxwell, 2001).

Despite the progress in the reducing the poverty in some part of world, millions is still struggling
to make ends meets. In southern and eastern Africa the breadth and depth of poverty and
vulnerability are increasing as a consequence of increased exposure to natural and human
induced shocks and stresses and impact of HIV and ADIS. Poverty as a vulnerability concept is
now seen as a dynamic process which allows for putting in place proper proactive policy
intervention to addressing poverty, scholars have increasingly recognized that exploring the
vulnerability is very necessary for understanding ex-ante poverty dynamics and policy
interventions. The dimension of poverty as low level security is not appropriately measured in
Ethiopia (Tassew, 2004). Peoples everywhere faces risk and vulnerability but poor, peoples
especially those living in rural areas dependent on agriculture and tropical ecologies faces more
than others (Diamand 1999) this is true of large proportion of sub Saharan Africa’s( SSA)
populations particularly in Ethiopia. There are a number of risk and vulnerability that derive and
maintain poverty in SSA including harvest failure, market failure, and volatility, coefficient and
health shocks.

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By identifying who are poor, who is not and the characteristics of those who are is not enough
for structuring poverty alleviation policies. “Poverty is stochastic phenomenon” (Chaudhuri et al:
2001). Poverty analysis focusing on attention on the current poor may over look important
segments of the population who while not currently impoverished are lower susceptible to
poverty. Those people whom are currently not poor may fall below the poverty line and it is also
possible for people currently poor to escape from poverty. Therefore, appropriate anti-poverty
policy intervention needs to looks at not just who is poor today, but also who is likely to be poor
would become poor in the near future. This leads us to the concept of “vulnerability to poverty”
which is the risk that a household would become poor in the near future (Suryahadi and Sumarto,
2001). In this regard the study would look in to the vulnerability of household to poverty and try
to examine the household characteristics, which are likely to be associated with vulnerability.

So, Ethiopia is a country of great diversity interims of topography, agro ecological zones,
cropping patterns, ethnicity natural resource, and consequently in the livelihood patterns of the
population. The agricultural sector is dominated by smallholder’s households who produce and
cultivate more than 94% of the agricultural output (Demeke et al 2003). The majority of people
in Ethiopia are living in the rural areas 83% where poverty is more wide spread than urban area.
In Ethiopia poverty is pervasive deep rooted, and multi-faceted. Large proportion of its
population lives under object poverty in both urban and rural area. About 44% of the population
is below the nationally defined poverty line in 1999/2000, while it is 45% for rural population
and 37% for urban population. According to the 2004/05 HICES, the proportion of poor people
(poverty head count index) in the country is estimated to be 38.7. While the proportion of the
population below the poverty line stood at 39.3% in rural areas, it is estimated to be 35.1% in
urban areas.

Although poverty multi-dimension it has always been studied in world of certainty. Little
regarded has been given to the implication of exposure to risk, with some expectation to reduce
poverty sustainability, however, reducing the household vulnerability and increasing the
household resilience are also necessary (Jose et al 2007). This aspect is often over looked by
policy maker. For instance most traditional measure of poverty including those used to define
some millennium development goals (MDGs) only weigh the current poverty household with no
regard for the probability that household might fall in poverty in the future.

2
In Ethiopia there is the difference on the prevalence of poverty among regions those region
southern nation nationality and peoples regional state (SNNPRS) is the one which suffers from
chronic poverty. SNNPRS has a number of zones and woreda’s. Among those zones Segen zone
is the one which is recently established (2003) includes only five woreda’s. Among this Konso
woreda is largest one so the researcher observed the occurrence and the effect of chronic poverty
in every year. The researcher would be intended to determine the determinants of rural
households’ vulnerability to poverty in Konso woreda determinants which includes age, sex,
education, income, family size, total livestock unit, and other determinants.

1.2 Statement of the problem

In many developing countries poverty reduction is primary development goal in Ethiopia. The
country is committed to the millennium development goals (MDGs). This seeks among the
others things to eradicate extreme poverty and hunger. Though there is significant achieving in
reducing poverty in recent years. Many of the indicators remained by far the highest in the world.
According to 2011 HICES the proportion of poor people in the country was estimated to be
29.6% (MoFED, 2012). The issue of whether or not household is poor is widely recognized as an
important, though indicators of household’s wellbeing. This is reflected in the central role the
concept of poverty plays in analysis of social protection policy. In recent years however, the term
of vulnerability has come to widely used alongside poverty in discussion of poverty alleviation
and social protection strategies.

The term of vulnerability has been severally given too many meanings by researchers.
(Chaudhuri, 2000) defined vulnerability as the ex-ante risk today that a household will, if
currently poor, remain poor, or if currently non-poor will fall below the poverty line next period.
Building on the recent literature of consumption something and risk sharing, vulnerability to risk
was defined by Skoufias (2002) as the degree to which the rate of household consumption co-
varies with the growth rate of household income. This definition of vulnerability explicitly
acknowledges that household may adopt a variety of risk management strategies such as saving
and loans to protect themselves from such risk vulnerability. A World Bank study on risk
management in south Asia however defines vulnerability as “the likelihood of being adversely
affected by the shock that usually causes consumption level, or other factors that affect wellbeing

3
drop” (World Bank 2001). Other studies have made use of various indicators in defining
vulnerability Quisumbing (2002) used both consumption something definitions as well as the
link between consumption- something and exposit impact of shocks as measures of vulnerability.

Regardless of the different types of definition put forward, it is clear that the term vulnerability
deals proactively with the problem of households’ poverty and risks. Term vulnerability is
therefore different from poverty since the concept of poverty is an ex-post measure of a
household’s well being, while vulnerability is an ex-ante analysis of a household well being. In
this context, poverty is static concept of vulnerability is more of a dynamic concept. This
however does not mean that there is no connection between vulnerability and poverty. The core
relation between vulnerability and poverty can only be stressed when the vulnerability of
different segments of the population is to be assessed at present in the near future. In this
connection, household’s vulnerability will be perceived as the probability that the household will
experience poverty in the near future. It is also important to note that changes in vulnerability are
broadly consistent with poverty trends (Bidani and Richter, 2001). This is why the term
vulnerability is presently being used alongside poverty in discussing poverty alleviation and
social protection policies. The study would currently suggest that the rural households in
Ethiopia have different segments in terms of demographic and occupational compositions and
characteristics of community in the household resides. This study interested in generating a
vulnerability profile of the different segments of rural households of Ethiopia. Vulnerability of
this type can be useful illustrative device in the discussion of policy priorities among such
segments of Ethiopia rural population. Studies such (Siegfried, 2012 and Decron, 2001 and
Krishanan, 2000), have identified some of poverty among rural farming household in Ethiopia.
This identifies rural Ethiopia as most vulnerable to poverty. The study however failed to provide
information on expected poverty profile of rural Ethiopia using idiosyncratic and covariate
variable or shocks .This is one gap in vulnerability assessment study that this research work is
out to fill. Survey of literature on poverty suggests that most of the related studies conducted in
Ethiopia so far not only focus on poverty at a point in time but also do them hardly gives a
comprehensive explanation of the determinants of vulnerability to poverty. Even if there are few
studies on the area, they largely focus on rural parts of the country and mainly their center of
attention is on measuring vulnerability (example Abrham 2012). Therefore little is known on the
covariates of vulnerability to poverty in urban Ethiopia. The motivation and objective of the
4
study emanates from the indicated gap inclusion new variable. Apart from all the entire effort of
the people revolves around seeking answer to the following basic questions.

1.3 Research question

The research point out where the following questions:

 What is the extent of vulnerability to poverty in the study area?

 What are the determinants of vulnerability rural households’ to poverty in the study area?
 What is the percentage of highly vulnerable, less vulnerable and not vulnerable households in
the study area?

1.4 Objective of the study

The general objective of the study is to identify the major determinants of rural
households’vulnerability to poverty in Konso woreda.

This study specifically devoted to:

 Measuring the extent of vulnerability to poverty of the household in the study area?
 Identify the determinants of rural household vulnerability to poverty in the study?
 Identify the most vulnerable portion of the society in the study area?
 To fore ward some feasible policy recommendations based on key results of the
study.

1.5 Significance of the study

There are several poverty related studies conducted in Ethiopia in recent times, mainly because
of the accessibility of data from the various household surveys recently made available.
However, the lion share of the studies focus on poverty at a point in time. Though there are
researchers who attempted to study the dynamic nature of poverty in Ethiopia by including topics
like vulnerability, they largely focus on rural part of the country and center of their attention is
on measuring vulnerability. Like is known on the correlates of vulnerability to poverty in rural
areas of Ethiopia. This study would make a humble attempt to fill this gap by investigating the
determinants of rural households’ vulnerability to poverty in rural area.

5
Moreover, the study would be a step forward in developing policies, which help not only the
peoples who are indentified as poor but also those at edge of joining the poor. Last but not last;
the study would be a stepping stone for those who have interest in conducting future studies on
the area.

Also used as a source material reference for coming studies in study area.

1.6 Scope and limitation of the study

Explicitly mentioning the limitation of the study helps cautiously judge that came out from the
analysis. In collecting data the study would concentrate in Konso woreda only and is not covered
other parts of the Woredas’.

Another limitation of the study emerges from the information collect through structural
questionnaire. The questionnaire would be designed in such a way that it would provide
information on the income and consumption patterns of the households in the study area. The
study would not included other facilitates and standard living, during the collection of data
research would visit only the households. Accordingly the credibility financial of the information
collected from the households will depend on their recall.

Some respondents are not being willing to give information on their property. The respondents
also show a tendency of underestimating their property, this is because they fear tax related
problem. The information office documents areinadequately enough because of the frequent
clash between different classes of the society due konso peoples asked zonal administration
question due to this reason in previous year 2015/16 to 2016/17 all of government office are
closed.

Finally, this study due this problems mentioned above the researcher can’t estimated the poverty
line because some distortion of the price, so focused only on most study conducted different
zonebased on this researcher also used that one.

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1.7 Organization of this paper
This paper contains five chapter, chapter one include introduction, background of the study,
statement of problem, research question, objective of the study, significance of study and scope
and delimitation of study. Second chapter consist literature survey, definition of basic
terminologies theoretical literature review and empirical literature review. Third chapter includes
description of study area, data source and method of data collection, method of data analyzing,
sampling technique and sampling size, empirical model specification and estimation technique
and definition of variables and its hypothesized signs and the fourth chapter contains the data
presentation through both econometric model and descriptive method and the last fifth chapter
composed of conclusion and recommendation.

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 CHAPTER TWO

2. SURVEY LITERATURE

2.1 Definition of Basic Terminologies

Literatures on the definition of poverty provide many different interpretations. Based on different
definition, different implications on the incidence of poverty and policy analysis have been
drawn. Constance F.etal,(1995)define the poverty as economic deprivation. A way of expressing
this concept is that pertain to peoples lack of economic resource.

The world bank (2007) defines the poverty as “inability to attain a minimum standard of living
Lapton and ravalion (1993) defines that poverty exists when one more personal fail short of a
level of economic welfare believed to comprise a reasonable minimum either in absolute sense or
a standard specific society.

Poverty in developing countries, like Ethiopia is too often conceptualized as mass poverty
implying a situation where more than half of the total population of the country lives in poverty.
In concept in rural and urban areas though have some common sharing, surly have different
meanings (Ibid).

2.2 Theoretical literature

The Constance F.etal(1995) defined poverty as economic deprivation. A way expressing this
concept is that it pertain the people lack of the economic resource (example money, near money
income) for consumption of economic goods and service like food, housing, clothing, education
and transportation.

Under this analysis of poverty, the definition of poverty in terms of vulnerability has taken
various forms by various scholars. The source and the cause for the risk occurrence of
deprivation and result derived from incidence of the risk differentiated the meaning of the term.
Glewwe and Hall in 1998 identified the vulnerability to be structural and other being market
oriented that arise from the interaction of the household characteristics and their earning
capacity.

8
Other scholars defines the term of the vulnerability from a poverty dynamics point of the view as
probability of the falling to poverty in the future and at least falling once in to poverty in one the
period ahead (pritechetal 2000). And the vulnerability as the measure of “resilience against a
shock the likelihood that shock will result in decline in wellbeing “(the world bank 2000)

Chaudhuri in 2003 defines the poverty as a exposit measure of the wellbeing(or lack three of)
“not having enough now of the something valuable” and the term of vulnerability to poverty be
thought of as an exante measure of the wellbeing the probability of now of not having enough
something valuable in the future. “The presence of risk relates to events possible occurring
beyond the direct control of individual and households (Decrcon and Krishan 2000). The fact
that the level of future wellbeing is uncertain, distinguishes the concept of the poverty form the
notion of vulnerability “(Decrcon, 2007).”

Decrcon and Krishan in 2000 defines poverty as intrinsic value of wellbeing that emerges from
the philosophy that “being well today is not a guarantee for being well tomorrow” hence they
forward a comment on the concept that both alleviation prevention strategies to be instruments
needed to adopt simultaneously to effectively tackle poverty in poverty reduction strategies and
programs. This subject matter is analogous to treatment of household members be given
community upon disease outbreak. A parallel must be given to these who are already affected
and preventive measure to be taken to the others who are at risk.

2.2.1 School of thought and poverty

In literature there are three main schools of thought concerning the definition and measurements
of the poverty. These are welfare school; basic needs school and capability school (Garza 2001
and yared 2005). Thaws schools although perceives poverty differently, there are areas in which
they share some common meaning which is all of them judge a person to be a poor whenever he
or she is lacking with respect to responsible minimum standard.

A. the welfares school

This approach refers to numerous micro economic precepts and postulates that economic actors
are rational and that they behave in ways to maximize their benefits, in other words the welfare
or satisfaction that they derive from their consumption of goods and services.

9
In this scene the role of government should be limited, even though it is still possible for the
government to implement mechanisms that increase individuals benefit and to measure aggregate
so dial benefit. In this sense the welfare approach will be favorable to the implementation of
economic policies oriented primarily towards increasing productivity, employment and income
growth (Esubalew, 2006). The welfare school relates definition of poverty to economic well
being of the society. It assumes that when societies are not able attain a level of economic well
being deemed to constitute a minimum by the standard of that society and them a person faces
poverty. It sees income as a determining factor for the presence of poverty (Dorothee B., 2004;
Yared 2005). Nevertheless, this approach has been criticized in two grounds (Garza, 2001;
FitsumT, 2002; Dorthee 2004).

B. The basic need school (BNA)

These schools define poverty when one lacks basic needs (goods and services). It concentrates
on the degree of fulfillment of the basic human needs in terms of nutrition, food, health, shelter,
education, transport and so on Yared (2005) tried to explain the limitation of basic needs
approach as a definition and measure of poverty. He argues that the set of basic goods and
services is different individuals depends on age, sex, type activity, etc of basic problems he cited
it how to determine the set of basic needs. There is even a high disagreement among
professionals on the determination of basic needs.

C. The capability of school

What is emphasized in this school is neither the economic wellbeing nor the basic needs deemed
to satisfy the minimum standard by the society; it is nevertheless, human abilities or capabilities
to achieve a set of functioning. This is an alternative criterion for the definition and measurement
of well being which tells the extent to which people have capabilities to be and to do things of
intrinsic worth. Sen (1987) wrote that that the “value of living standard lies in the living, and not
in the possessing of commodities” Such an approach to the definition and/or measurement of
poverty suggest a broader set of criteria of assessing poverty than just income and/or
consumption. The measure is said to include public provided but noon-market service, like,
sanitation, health care, education and life expectancy.

10
Sen (1987) also introduced the notion of capability in poverty definition and assessments. He
defined poverty not only as a matter of low level of wellbeing, but also as lack of ability to chase
well being specifically because of lack of economic means. He favored the capability to
functioning as criteria for assessing standard living, and implication poverty rather than the
utility that must be derived from using that capability.

However, the difficulties of this method lie in the application of the concept of capabilities in
practical poverty assessments. This school assumes if one is devoid of the right to participate and
does not perform the functioning he/she is considered to e poor.

2.2.2 Poverty lines and types

A poverty line is defined based on a minimum level of consumption, normally as the cost of a
bundle of goods (both food and non-food) deemed to ensure that basic consumption needs are
met and below which is survival is threatened (carolinemoseretal 1996 and Anthony etal.;2009).

More formally the povertyline for a household may be defined as the minimum spending or
consumption (or income or other measure) needed to achieve at least the minimum utility level
given the level of prices and the demographic characteristics of household. Therefore poverty
measurement generally assumes that there exist predetermined and well defined standards of
consumption which must be reached if a person is not be deemed ‘poor’ (Ravalion, 1992 and
WBI, 2005).

The choice of poverty line differs from country to country as it’s depends on the use to which it
will be put. For international comparisons the $1/day standard is helpful, while the targeting the
poor relative poverty line is sufficient. There the proportionate choice of poverty line is a matter
of judgment (WBI 2005).

A. Absolute Poverty Line

It is known as poverty line and is fixed in terms of the standard of living it commands over the
domain of poverty comparisons. Absolute poverty line should not defined as rigorous poverty
line rather than it should be the one, which is fixed in terms of the living standards indicator
being used and over the entire domain of the poverty comparisons with the two persons at the

11
same real consumption (Ravavllion, 1992, Contance F, 2005, Esabalew, 2006, and Anthinyetal
2009).

An absolute poverty line remains fixed over the tin adjusted only for inflation. It is perceived as
subsistence below the minimum requirements for physical wellbeing, generally, based on the
quantitative proxy indicator such as income or calories but sometimes taking in to accounts a
broader package of goods and services (David H. et al 2001).

An absolute poverty line is indispensable to measures the effect of poverty reduction policies and
programs overtimes, or to estimate the impact of projects on poverty legitimate comparisons of
poverty rates between the one country and another can only be made if the same absolute poverty
line is used in both countries. Thus, the World Bank needs absolute poverty line in order to able
to compare poverty rates across countries, which in turn is useful in determining the where to
channel resources, and in assessing progress in the war on poverty (WBI, 2005).

One of the common weakness of an absolute poverty line is it does not change with living
standards of society in question. Thus peoples are labeled ‘‘poor’’ when some absolute needs are
not sufficient satisfied, that is, needs are not related to the consumption pattern of others peoples
in given society (Esbalew, 2006).

B. Relative poverty line

Relative poverty line defines how income and inequality is distributed in a society. It perceives
poverty as a function of relative deprivation in terms of commodities defining poor households
as those that are unable to attain given commodities that are normal for the society (Garaza 2001
and Esubalew 2006). The statement itself is self intuitive in that this poverty defined by the
position of an individual compared to other members of a given society. Poverty is discussed
here as the share of people whose equalized income fails below a poverty line. In practice most
popular choice to set poverty line in this method is done by taking certain percentage of mean or
median incomes of the population. Therefore, a measure of relative poverty defines “poverty’’ as
being below some relative poverty threshold (Salliala et al, 2004, Marduch J; 2006).

Many studies in wealthier countries on other hand set poverty line based on relative standards on
certain percent of the national mean income. In Britain for example, the poverty line is 60

12
percent of the median income level (after taxes and benefits and adjusted for household size) an
approach adopted broadly in the European Union.

This approach is suffering from major shortcomings. First, it lacks clarity as to whether it is an
indicator of poverty or measurement of income inequality. Secondly, the approach is entirely
reliant on the value decision of the researcher that it is hard to monitor poverty over time or
space. Thirdly, the relative poverty line is essentially quite arbitrary and always assumes constant
percent of the population in the bottom as poor, even if living standards for the whole population
have risen over time. Fourthly, such as method is technically feasible only for developed
countries (Metalign 2005 and Salliala et al 2004).

In general, poverty in this context is defined as a relative deprivation with respect to various
commodities. Hence, households or individuals are said to be “poor” when they lack of certain
commodities that are common in the society where they live. Nevertheless, the relative
importance of studying poverty as comparative phenomena is justified as modern societies meet
head on economic liberalization ageing population. Martial dissolution and increased labor force
involvement by women. Relative poverty is a certain concern of developed countries where as
measuring absolute poverty is the main of least developing countries like Ethiopia (Ravallion
1992).

C. Subjective poverty line

The “subjective” approach to understanding and measuring the poverty argues that poverty and
ill being must defined by “the poor” or by the communities with significant members of poor
people. The concept of subjective poverty is based on the promise that people are the best judges
of their own situation and that their opinion should ultimately be the decisive factor in defining
welfare and poverty (Mekonne T; 1999). The approach explicitly recognizes that poverty lines
are inherently subjective judgments of people make about what constitutes a socially acceptable
minimum standard of living in their own societies (Ravallion, 1992 and Yohannes K, 1996).
Subjective poverty measures are therefore based on responses of individuals to attitudinal
question on household income and welfare like what level of income do you personally consider
as absolutely minimum.

13
In your inspection is the household income ample to meet the household’s needs? There is no
guarantee for individuals similar in all aspects to provide similar response to the same question
and hence does not insure consistency. Furthermore, the application of this approach has been
confined to develop countries of west.

This because the concept of income on which the procedure are anchored is hard in a developing
countries context, where the rural income is predominately and largely subsistent (Metalign A;
2005)

2.2.3 Setting poverty lines

In the analysis of poverty, the starting point is the identification of the poor from the non poor.
To deal with this poverty line pays as vital role in quantifying the various indicators of wellbeing
in to single index (Ravallion, 1992). Even though the choice of poverty lines is always arbitrary
from country to country the common argument is that there is a minimum level of consumption
of goods and service below which it is difficult to sustain our life. Hence in order to get the
poverty line, it demands meticulous work in that the level and type of goods and service must be
precisely indentified.

Thus, the most popular measures of poverty lines are constructed on the basis of three methods,
the cost of basic needs, food energy intake method and direct calorie intake (Fitisum T; 2002,
Metalign, 2005, Tassew et al ., 2008 and Anthony et al 2009).

A. Cost of Basic Need Approach

The cost basic need approach beings with a national threshold chosen to reflect minimal needs
for the health life, adjustments are then made for non-food expense like housing, clothing and
social values and applicable if the price information of goods and service of consumed by the
poor is easily available (WBI, 2005 and Morduch J.; 2006).

The definition of basic needs is believed to be a socially determined normative minimum to

avoid poverty and the cost basic needs is then closely similar to the legal minimum usage rate.
Supposition about the fundamental national requirements vary considerably around the world
and almost all adopting national standards set by the world health organization and other also set
standards based on inputs from national experts. Therefore, the cost of basic needs approach

14
computation utilizes the following main steps (WBI 2005, Metalign 2005 and Morduch J.; 2006
and gauarD.m et al .., 2006).

 Single out nutritional requirement for good health.

 Specify a consumption bundle that is expected to be adequate.
 Estimation the cost of the bundle for each sub group (urban/rural each region, etc)
 Add non-food component which are expected to be adequate.

Thus, accordingly, basic needs poverty line is the arithmetic sum of food poverty line and non-
food poverty line (Ravallion, 1992, Fitsum T; 2002, WBI, 2005 and Morduch J.; 2006).

Mathematically expressed

PL= PLF +PLN Where PL is the poverty

PLF is the food poverty line and

PLN is non- food poverty line

B. Food Energy Intake Approach (FIA)

This approach places the poverty line as the income or consumption expenditure level just
sufficient to meet predestined food energy intake to an individual. The level of FEI, strongly,
influenced by so many factors and preference, activities, age, sex of individuals and consumption
habit are the most influential ones. The poverty line now can be constructed after treating these
differences and valuing the costs of attaining the predetermined FEI level. This could be
computed by finding the consumption expenditure or income level at which the person attains
the food energy level yet most scholars are argues that consumption will be better indicators of
well-being (Esubalew, 2006).

Therefore, the food energy intake method (WBI, 2005) is utilizes as an alternative method to
construct the poverty line by researcher if price data are not available. As cost of basic need
approach the goal here is to find the consumption of level outlay (or income) that allows the
household to obtain enough food to meet its energy requirements.

15
C. Direct Calorie Intake Method

In this direct calorie intake method the poverty line is defined as the minimum calorie
requirement for survival. Individual who consume below a predetermined minimum calorie
intake are considered to be poor. However, this approach does not account for the cost of
obtaining these calories and ignores non-food needs (Tassew et al .., 2005).Though from the
above explained approaches of poverty the researcher will be intended to use income approach
method.

2.3. Empirical Literature Review

In Ethiopia there are limited numbers of vulnerability studies found on rural households due to
lack of rich panel or cross sectional data for long period of time. One of the recent empirical
literatures relates to vulnerability on Ethiopia rural households includes the panel data analysis
made by Abraham and Baure in 2012. They have used data from ERHs their own primary data
from two villages in analysis the poverty dynamics and vulnerability in the northern highland of
Ethiopia. They decomposed households in to chronic and transient components using panel data
(Abraham and Baure 2012). Abraham and Baure also used the methodology of the fixed effect
instrumental variables (FEIV) model and the Multinomial model to control for heterogeneity and
analyzing the factors affecting the probability that a household is in chronics poverty as opposed
to transient poverty. Both used vulnerability as expected approach to enable them to assess
poverty dynamics using Foster Greer Thornback (FGT) measures components and approaches
that result in that chorionic poverty to be dominant in the study areas compared to transient poor.
Using one USD as poverty threshold and 0.5% as vulnerability thresholds to poverty in the other
village and they find out an existence of decline in one village and increase in the other village.
Finally, the vulnerability to poverty and its determinants are examined using three steep
generalized least square and ordinary least square techniques respectively.

Dercon and Krishman in 2000 contributed a great deal of the poverty measures of the rural
livelihood in Ethiopian context. Using data from ERHs and consumption as a welfare indicator
and considering nutrition as durable goods. They examined the ability of individuals to smooth
their consumption over time and within the household they found that there was a great variation
in the consumption, especially for poor and for women in the southern part of country. They also
reported full risk sharing of illness, measured by unpredicted illness shock, with household

16
expect for poor southern households, and were shocks of women were not pooled (Dercon and
Krishman). However, even if the data source is the same and their objectives are closely related,
if differs from the related studies in that use of food and non-food consumption as dependent
variable helps them examine the effects of consumption level of each household on various
consumption related explanatory variables. Also the focus on the household and the village’s
levels units of analysis will enable to through investigate the coping capacity of each household
consumption against shocks.

Recently a review of empirical on vulnerability based on approach developed by Chaudhuri

(2003) reveal that a measure of vulnerability called vulnerability as expected poverty is wide
used. Suryahadi et al (2002) define the vulnerability as the “risk a household will fail in to
poverty at least once in the next few years”. They found out that the number of people predicted
to vulnerable are much higher the observed poverty level when poverty line is set at one USD
per day. However, the predicted vulnerability and observed become more or less the same when
the poverty line is signed to two USD perday.

Ligon and Schechter (2003) also developed a measure of vulnerability using utility approach.
They measure welfare loss associated with the different source of uncertainty. They applied their
approach to a panel data from Bulgaria and they found out the importance of risk to
vulnerability. They further noted that poverty and risk play equal role in reducing household
welfare.Other such as Gunther and Harttgen (2009) Christiaesen and Subbarano (2005),
Hoddinott and Quisumbing (2003) and Christiaesen (2000) have studied the relative impact
shocs on household vulnerability to poverty.

17
 CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1 Description of study Area
The study would be conducted in Konso Woreda and konso fond in southern nation nationalities
and peoples of regional state (SNNPRS). SNNPRS is one of the largest regions of Ethiopia
accounting for more than 10 percent of the country’s land area. Based on the 2007 census
conducted by central statistics agency (CSA) of Ethiopia the SNNPRs has estimated total
population 14929548 of whom 7425918were men and 7503603 women’s. Of them 13433991 or
89.98 percent of the population are estimated to the rural inhabitants, while 1495557 or 10.02
percent are urban this makes SNNPRs is overwhelming the rural. And SNNRs are dived in to 14
administrative zones, 133 woreda’s and 3512 Kebeles and consists 3110995 household units
were counted which results average for the region 4.8 percent person to a household, with urban
households having average 3.9 percent and rural household s 4.9 peoples.

Konso woreda located great refit valley and 595 and 360 kms southwest of Addis Ababa and
Hawassa town respectively. And Konso woreda on the south oromia region and west by weito
river which separate it from Debubomo zone, on the north east by Amharo woreda and on the
east by Burji woreda and administer center is karat, others towns included in Konso fasha and
sagan. Konso woreda composed of the 42 kebles and 1 sub city (karat town) totally as 43 kebles
its population estimated as 250000 out which 51.76 percent females and 48.24 percent males.
According to the 2007 census survey with faster population growth annual rate exceeding 3
percent Konso development association (KDA 2001). The mean of annual rain fall range
between 601_1200mm, Konso has wide variety of potential development and investment
activities agricultural as main economic source which commonly produced like sorghum, maize,
teff, livestock and etc. Konso people are known by their physical hard working and the
indigenous people are kown by terracing (soil and water conservation methods) that makes them
to known in the world. In Konso woreda have one district hospital (KDH), 8 health center and 34
private clinics are available and Konso well known by Konso cultural landscape from range of
natural and cultural attractive tourism destination that appear to visitors number of major
domestic and international market.

18
3.2 Data, Source and Methods of Analysis
To analysis the incidence and determinants of rural households’ vulnerability to poverty, the
study would use primary data which would be collected using structured questionnaire. The
questionnaire would be designed in such away it provide statistics information in households on
demographic composition, income, and consumption expenditure, idiosyncratic and covariate
shocks that the households is exposed to the previous years and other important socio-economic
variables. For this unit of observation would be the household defined as group of persons eating
and living together for more than a month. The study would be conducted in December 2016/17
from 100 sample households in mostly in Konso Woreda.

Secondary data would be also collected from the related literature review, fact documents
empirical framework from different office.

The data would be analyzed by using both descriptive statistics and econometrics analysis. The
study would use descriptive analysis by tabulation data representation and other techniques. The
econometric analyses the study would employees Chaurdhuri Model for analyzing the
determinants of vulnerability to poverty by identifying the households the probability to failing
poverty in the future.

3.3 Sampling Technique and Sampling Size

These would use two stages random sampling techniques were used to select 100 frame
households. In the first stage woreda’s categorized in different kebeles based heterogeneous
character. There are 42 kebel’s and 1 administrative city (Karat) town in Konso woreda. Were
obtained and used as the sampling frame in order to selected primary sample unit. Then three
kebels are selected randomly. In the second stage frame households in the three kebels in the first
stage are used as secondary sampling unit and using proportionately. Finally 100 units’ frame of
household are selected from three kebeles based on random technique using the following
(Yamane 1967) formula as follow

N
n=
1+ N (e 2)

Where N, n and e refer to total households in the sample kebeles, sample households and level of
significance respectively. Total household in Konso woreda is 43902 while the total household in

19
three sample kebeles is 6056. There are 1340, 3260 and 1456 households in Dara kebele, Jarso
kebele and Debanakebele respectively.

6156
n=
1+6056 ¿ ¿

So, a total of 100 sample households are used in the present study so as to obtain primary data
which are used to answer the basic objectives of the present study. Finally, using proportionate
sampling 22, 55 and 23 rural households are selected from Dara kebele, Jarso kebele and Debana
kebele respectively. From each sample kebele, households are selected using systematic random
sampling technique.

3.3 Empirical Model Specification

This study followed Chaudhuri’s suggestion and assumes that all the cross‐sectional variability
of the crucial variable – percapitaconsumption depends on the household’s observable
characteristics. In modeling vulnerability to poverty, first percapita consumption is regressed on
the household’s observable characteristics. This assumption allows the researcher to estimate
vulnerability using cross‐sectional data from a single point in time, thereby limiting data
requirements.

3.3.1 The Determinants of per capita Consumption of Rural Households’

Since the residuals that would be generated by this estimation may correlate to each other and
exhibit different variances, the model is unable to capture all the systematic variability of the
dependent variable (consumption). To address this, the researcher under takes a second step
regression which involves estimating, via weighted least squares, a model of the residuals that
explains their variability.

This second step gives the estimates of the residual variance. Lastly, the estimate of the variance
of the residuals is used to calculate the probabilities that percapita consumption, which is
assumed to be normally distributed, may be lower than an acceptable threshold, poverty line.

Suppose that the log of percapita consumption of each household is a function of a vector of
characteristics such as household size, level of education, location, etc. So as to determine the
effect of household characteristics and location characteristics on household consumption
expenditures the approach of Chauduri, S. (2000), which has been widely used to generate

20
vulnerability indices when single point consumption data are available and used. Suppose that
the stochastic process for generating per capita consumption expenditure C ifor the i thhousehold is
specified as

'
lnC i=α+ X i β +ui (1)

Where C ipercapita kilocalorie consumption for the i th household at a point of time while X i
represents a bundle of observable determinants of percapita consumption. The parameter β is a
vector of coefficients of household characteristics to be estimated and ui is a mean-zero
disturbance term that captures idiosyncratic shocks that contribute to different percapita
consumption levels. The consumption model in equation # (1) assumes that the disturbance terms
has mean zero, but varies across households. Therefore the variance of the disturbance term
violates the OLS assumption of constant variance (homoscedasticity) thus heteroscedastic, and it
varies with the determinants of percapita consumption as follows.

δ 2i =X 'i γ +α + v i (2)

To account for heteroscedasticity in equation # 1 and get efficient estimates of β and γ , the
researcher used a three-stage feasible generalized least squares (FGLS) method in estimating
equation #1 and equation #2. First, the researcher estimated equation #1 using OLS to obtain
estimated ui and obtained its squared values as estimatedvariance δ 2i .In the second step, the
variance obtained in the first step is regressed on the household socioeconomic characteristics
and other characteristics as can be seen from equation # 2 using OLS. From this second
estimation, the variance of δ 2i is estimated and used to avoid the problem of heteroscedasticity
from equation # 1 as follow.

2 '
δi X 1 v
=( i ) γ + α ( )+ i (3)
δ δ δ δ

Which can be written as

¿2 ¿
δ i = X i γ +α∗+ v i∗¿ (4)

21
The variances of equation #4 are homoscedastic and the estimated coefficients are now efficient
and the variance obtained from equation # 4 is used to correct equation # 1 for heteroscedasticity
and can be specify as follows.

lnC i ¿ (5)

Equation #5 can be written as

¿ ¿ ¿ ¿
lnC i =α + X i β +ui (6)

3.3.2 The Logit Model for Determinants of Vulnerability to Poverty

Equation #6 is estimated using OLS and this gives us efficient estimates of the parameter β. We
then generated the expected percapita consumption for each household by using equation#6. The
expected percapita consumption thus generated is compared to the constructed poverty line (148
birr per month). Households whose predicted percapita consumption are less than the poverty
line (148 birr per month) are classified as poor and those with predicted percapita consumption
greater or equal to the poverty line are classified as poor. A dummy dependent variable is
generated by giving 1 for poor and 0 fornonpoorhouseholds in the study area. Then, a logistic
regression model is estimated to generate Vulnerability as Expected Probability (VEP) of being
poor in the future. This model gives us also the determinants of poverty in the study area.

ln ¿ (7)

Vulnerability as expected probability of being poor in the future can be estimated by the
following equation,
'

VEP= pr ( predicted percatita consumption< poverty line ) =e

X β
(8)

The ultimate outcome of our calculations is a set of estimates V i (one for every household i) of
the probability that each household faces of falling below the minimum percapita consumption
requirement in the future. Each estimate takes values in the interval, [0, 1]1.

The extremes of the interval represent two opposite certainties: when V i=0 , household will consume in the future
1

with certainty at least the minimum amount of consumption prescribed by the threshold; when V i =1 household will

consume less than the threshold (poverty line) in the future. In all intermediate cases, when 0<V i<1, no particular
outcome is anticipated ex ante.

22
Since we can attach an index V i to all households, the question arises which households should be
considered vulnerable in between the two extremes. This is particularly important for the design
on any mitigating interventions and associated policy formulation. It makes sense to consider
households that have an estimated vulnerability close or equal to unity as “vulnerable” and those
with a vulnerability index close or equal to zero as “non-vulnerable”. But, as we move towards
the center of the spectrum, the distinction becomes less obvious and the need for an arbitrary cut‐
off point arises. Among the many choices of cut‐off points, the most commonly used one is 0.5
and the mean vulnerability which is equal with the observed poverty rate (0.298).
Finally, the researcher estimated the determinants of vulnerability by giving 1 for households
with V i ≥0.5 and 0 for households with V i <0.5 using logistic regression model.
V =α + X 'i β +V i(9)
Since the dependent variable is dichotomous, this model can be estimated using maximum
likelihood estimation and can be specified as follow.

Pr (V =1/ Xi )=Pi=G( β 0+ β 1 Xi )=G(Zi)(10)

Where G is a function taking on values strictly between 0 and 1. That means, 0≤ G (Zi) ≤1, for
all real numbers Zi. This insures that the predicted probability (Pi) strictly lies between 0 and 1.
For Logit model, G (Zi) is defined as follows:

(Zi ) Zi (β 0+ β 1 Xi)
exp e 1 1 e
G (Zi) = Pi= (Zi)
= Zi
= −Zi
= −( β 0+ β 1 Xi)
= (β 0 +β 1 Xi) (11)
1+ exp 1+ e 1+ e 1+ e 1+e

Therefore,

Zi
e
Pi = Zi , where Zi = β0 + β1Xi. (12)
1+ e

If Pi is the probability of householdsbeing vulnerable and 1-Pi is the probability of households

being non-vulnerable, the probability of being vulnerable and the probability of being non-
vulnerable can be written as:

23
 Zi
e
Pi = Zi (13)
1+ e

1
1-Pi = Zi (14)
1+ e

Take the ratio of the probability of being vulnerable (Pi) and the probability of being non-
vulnerable (1-Pi) and the resulting ratio is called odds ratio and can be written as:

e Zi
Pi 1+ e Zi
= = e Zi(15)
1−Pi 1
Zi
1+e

Take the natural log of the above odds ratio and the resulting equation is called logit.

Pi
ln ( )=Li=Zi (16)
1−Pi

Li=Zi=β 0+ β 1 Xi(17)

Where, Li is called Logit which is linearly related with Xi and Xi is explanatory variables.
Finally, an empirical model for the determinants of rural household vulnerability to poverty can
be specified as follow:

Li=β 0+ β 1 AGE + β 2 SEX+ β 3 FS + β 4 EDU + β 5 INC + β 6 FARSIZ + β 7 NOOXEN + β 8TUL + β 9 DMRT + β 10 I

(18)

Where, Li, AGE, SEX, FS, EDUC, INC, FARMSIZ, NOOXEN, DMRT, INFR and DPR
stands for log of the odds of vulnerability, age of household head, dummy for gender, family
size, years of schooling, income of households, farm size, number of oxen, tropical life unit,
distance from local market, distance from all season road and dependency ratio respectively.

3.4 Definition of variables and hypothesis

Based on the theoretical exposition and previous empirical studies the following explanatory
variables are hypothesized to influence the vulnerability of household as follows. Monthly real
income consumption expenditure per adult equivalent is the dependent variables in specified

24
FGLS procedure of estimation vulnerability to poverty index while the estimated vulnerability is
a dependent variable in the linear regression model.

Age- Age is generally is expected to affect consumption positively. As age of the household
increase the household acquires more experience, skill and accumulative asset that will expected
as positive impact on vulnerability to poverty.

Sex- is the dummy variable which takes the value 1 if the household hade is male and 0 other
wise. The sex of household head is vital in the context of poverty and vulnerability analysis. This
variable expected to positive correlated with vulnerability to poverty of households.

Family size- refers to total number of household members who are living and eating together for
at least a years. It is expected to affect the dependent variables in either way, depending on the
demographic composition of household. There is causal relationship between size and
vulnerability to poverty. The variable is expected to have a positive effect on vulnerability to
household.

Education (EDU) - it is a variable that refers to the number of years spent on in school or its
equivalent as measures of educational attainment of the household head. Assumed to have a
positive impact on welfare of the household therefore reduce poverty and vulnerability to
poverty as more educated people are more likely to get job are more productive on the
household..

Income (INC) – refers to the level of the income that the household earns monthly or daily in
dollars. It hypothesized that having or earning higher level of income positively correlated with
vulnerability to poverty.

Farm size (FA Size) - it refers to the total hectares owned by the household head used to
cultivating the crop and fodder for the lives stock. It hypothesized is positively with the welfare
of indicator of household to vulnerability to poverty.

Total livestock unit (TLU) – it refers to the value of total livestock assets that could be used as
oxen ploughing technology farming income received from their products and dug used as fuel or
organic manure to increase the production in agriculture. Expected to negatively relate to lower
vulnerability of household to poverty serving in the time of risk.

25
Number oxen (No Oxen) – it is important and critical production factor in rural center.
Availability of oxen besides on agricultural land meet high productive. It takes as dummy
variable as farmers used an oxen value is 1 and otherwise 0. It hypothesized with reduction of
poverty is positive impact.

Distance from market (DFM) – distance from the market in minutes in kilo meters it expected a
negatively affect the vulnerability to poverty of households.

Distance from seasonal roads (INFR) – distance from seasonal main road in kilo meters it
expected negatively affects the vulnerability to poverty.

Dependency ratio (DEPRATIO): the ratio is calculated of the number of family number not in
the labor force (<15 and +65) to those in the labor force in the household. The more dependent
members in the household the more the household will be vulnerable to poverty and vice vice-
versa. Therefore, this variable is expected to have a positive effect on the vulnerability on the
household.

CHAPTER FOUR

4. DATA ANALYSIS AND DISCUSSION

This section presented the key outputs obtained from descriptive and econometric data analysis
using data from 100 rural households in the study areas. To answer some objective of the study,

26
descriptive ways of data analysis was used while Feasible Generalized Least Square (SGLS)
method of econometric analysis was used to examine the determinants of vulnerability of rural
households to poverty in the study areas following Chaudhri (2002).

4.1Descriptive Analysis
This section presents the descriptive data analysis on some categorical and continuous variables
in the current study.

4.1.1 Decomposition of poverty by some socio economic characteristics

Poverty decomposition by different demographic characteristics and economic variables to
answer the question of who are poor in the study area, According to an effort or potential to
made here to decompose poverty over selected segments of sample like sex, educational
attainment, occupation in the study area. The result of this survey shows that among the total
poor, female headed household heads account for 8% of the same respondents. All the total
female headed households includes in the survey 8% of them found to be poor while 15% of the
male headed households are deemed poor Below the table 1

Decomposition of poverty by education level shows that households with higher educational
attainments households heads has low level of poverty relatively. Households with illiterate
heads are consider found to be poor the level of poverty increase as one moves from households
head by primary, secondary and above that level.

Most of the study conducted on determinants of poverty in different Zones and Woredas of
SNNP Regional State found a poverty line of around 148 birr per adult equivalent per month and
the present study also adopted this poverty line to classify households in to poor and non-poor.
Accordingly, from the total 100 sample households in the study area, 23 households are poor
while 77 rural sample households are non-poor.

Table 1: Decomposition of poverty by sex and educational level

Demographic Poor Non-poor Total population

characteristics HHs Number % Number % Frequency percentage

Sex households male 15 15% 63 63% 78 78%

27
 F 8 8% 14 14% 22 22%
emale
Total 23 23% 77 77% 100 100%

Education level Number % Number % Total %

Illiterate 15 15% 35 35% 50 50%
Primary 7 7% 20 20% 27 27%
Secondary 1 1% 4 4% 5 4%
Degree and above 0 0% 18 18% 18 18%
Total population 23 23% 77 77% 100 100%
Source; computed from own survey, 2017

4.1.2 Age distribution of household with poverty status

Two conflicting ideas have been dominating the correlation between the poverty and age of the
household. Some scholars contend the failing to vulnerability to poverty with old age is sever at
old age because of the individual household has few saving to compensated for the decreasing of
productivity and income from different activities.

From the table 2 below we explain the content of poverty in study area on the basis of the age
household head is categorized in to four groups. From the table we observe that shows among
the households who age between less than or equal 30 years 19 and 3 households are non poor
and poor respectively, who aged 30-45 years 8 and 29 households are poor and non poor and
those aged 45-60 years old 6 and 25 households are poor and non poor respectively and greater
than 60 years 6 and 4 households are non-poor and poor households respectively, this implies the
large aged peoples are old and becomes non-productive.

The largest percentage implies the respondents belong to below the age of that failing to
vulnerability to poverty to the near future period. So the major group of respondents 8% poor or
lives below the poverty line followed by 6%, 6% and 3% respectively.

Table 2: The distribution of age of rural household head by poverty status

Age category Poor Non-poor Total population

households Number % Number % Frequency Percentage

28
 Less than 30 3 3% 19 19% 22 22%
30-45 8 8% 29 29% 37 37%
45-60 6 6% 25 25% 31 31%
Above 60 6 6% 4 4% 10 10%
Total population 23 23% 77 44% 100 100%
Source; own Questionnaire survey 2017

4.1.3 Sex distribution of household with poverty status

A scholar who deals with poverty analysis come with different conclusion with respect to
correlation between poverty and sex household head significant affect poverty and that female
households are much vulnerable to poverty in the next near future time.

When we look at the sex composition of the household head from the table 3 below 78% of the
household respondents are male head households and the rest 22% respondents’ female headed
households were males so they are below the poverty line followed by 8% of the female headed
households. Among those male head households 15 and 63 household respondents’ poor and
non-poor respectively and from the female headed households 8 and 14 household respondents’
poor and non-poor respectively. This may be due to the customary prohibition of women
participation in political and economic activities which limits their information and access to
improve farm inputs. Generally from both male and female 23 and 77 households are poor and
non-poor respectively in study area.

Table 3:The distribution of sample household by gender and poverty status

Sex households Poor Non-poor Total population

Numbe % Number % Frequency percentage
r
Male 15 15% 63 63% 78 78%
Female 8 8% 14 14% 22 22%

29
 Total population 23 23% 77 77% 100 100%
Source; own computed survey 2017

4.1.4The distribution of family size of households

Family size refers to the number of household members who lived and eat with household at
least for one year. Household size is another factor that influence to failing to vulnerability to
poverty of the household the majority of farm household in Ethiopia are small scale semi-
agricultural subsistence procedure with limited to participation in non-agricultural activities
increasing family size tends to exert more pressure on consumption than the small size it
contributes to production. The following table 4 shows that 52% of the respondents answered
that the family size ranged between 1-4 people per household and 22% of the respondent family
size range 5-9 person per households. In addition some respondents said that one person marries
two or more than two women’s in Woreda and each household ruled by one husband.

Table 4: The distribution of family size of household head by poverty status

Family size Poor Non-poor Total population

ranged Number % Number % Frequency Percentage
1-4 7 7% 45 45% 52 52%
5-9 6 6% 16 16% 22 22%
10-14 10 10 % 16 16% 26 26%
Total 23 23% 77 77% 100 100%
Source; from own computed survey 2017

There it is possible to understand how much difficult it is to feed to this highly size within two
household by one family head of which most of them are children’s as well as they are not able
to get a minimum calorie per day for their basic needs. The survey indicated that the small family
size the probability failing to vulnerability to poverty compare with large family size among
those households with 1-4 ranged 7 and 45 households are poor and non-poor respectively and
among those 5-9 households are 6 and 16 are poor and non-poor, and the ranged 10-14
households members 10 and 16 are poor and non-poor. Generally 77 and 23 households is non
poor and poor respectively. The possible explanation is that as family size increases the amount

30
food consumption in one household increase there by that additional household member shares
the limited food resource. The above table indicates that household family size negatively affects
household consumption. This negative relationship shows that the probability to being non- poor
decrease when family size increase. In addition, the household with large family size faces some
difficulties in meeting their food requirements. And the households with large family size having
children of non-productive age could face the probability of the failing to poor because of the
high dependency ratio than household with small family size.

4.1.5 The Distribution of Land Size of Sample Households

As this study shows, farmland size affects consumption status of households positively.
Food production can be increased extensively through expansion of areas under
cultivation. Therefore, under subsistence agriculture, holding size is expected to play
significant role in influencing farm households' food consumption. The sample households
plough fragmented plots with different sizes and fertility levels.

Table 5: The distribution of the land size of household head by poverty status
Land size or Poor Non-Poor Total Households
cultivated land Number % Number % Frequency Percentag
e
Less 0,75 9 9% 19 19% 28 28%
0.75-1.5 7 7% 25 25% 32 32%
1.5-2.5 5 5% 24 24% 29 29%
2.5- 4 2 2% 9 9% 11 11%
Total households 23 23% 77 77% 100 100%
Source, own survey own questionnaire, 2017

The farm size or land holding as indicated on the above table 5 28% of sample units have land
size of less than 0.75 hectares per household, 32% sample unit have land size 0.75-1.5 hectares
per household, 29% sample units have between the class interval of 1.5- 2.5 hectares and 11%
sample unit have land size of 2.5-4 and these class interval per household. Among those this
class 2 and 9 households are poor and non-poor and those household who have less than 0.75
hectares 9 and 19 households are poor and non- poor and those households who have land size
1.5- 2.5 hectares among those 5 and 24 households are poor and non-poor respectively. The

31
implication that households who have hold large land size are non-poor, this is possible because
the size of land holding is a proxy for a host of factor including wealth capacity to bear risk and
income large farmer are associated with greater wealth and income increase availability of
capital, which increase the probability of investment in purchasing of farm inputs that increase
the food production for consumption and insuring non-poor. Since farmers have no equal
distribution of land which creates divergence in poverty among farmers, it is impossible for
farmers who have small farm land to attain the minimum poverty line study area. Therefore
under subsistence agriculture, land holding size is important determinant influence the household
lies above poverty line.

4.1.6 Participation in off- farming activities

Households’ participation non- farming income is received by participation in non-agricultural
activities. Therefore, concerned stakeholder showed identify the different possible types of off-
farm activities and support with the necessary knowledge and skill of the various types of off-
farming activities that could improve the lies above the poverty line status. From the following
table we can understand that out of sample size 54% did not participation in the non- farming
activities and only 46% can did it. It overall implication is that those households who participate
in off-farming activities can considered as less failing to below the poverty line and vice versa.
Because those who participate in off-farming activities can sustain when agricultural production
is fails.

This source income is collected from sale crop produce, sale of livestock and livestock
production and hiring of agricultural land. The table below implies that farm those who
participate in non- farming activities 40 and 6 households are non-poor and poor and from those
who did not participate in off- farming activities 17 sand 37 households are poor and non-poor
respectively. The more household head engage in gainful employment, the higher he or she earns
and greater chance of being non-poor.

Table 6: The distribution of households by off farm Participation and poverty status

Response Yes/No Poor Non-poor Total population

Number % Number % frequency Percentage

32
 Yes 6 6% 40 40% 46 46%
No 17 17% 37 37% 54 54%
Total population 23 23% 77 77% 100 100
Source; own survey questionnaire, 2017

4.1.7 Livestock ownership of households heads

The farmers in the study area are participation mixed farming system where livestock production
is an integral part of the system. Livestock benefits in different ways namely as source of power
for ploughing, source of cash income, source nutrition and means of transport for example
donkey. In view of this an inventory of livestock holding of sample households was under taken.
As the table 7 below who have large livestock holding are more likely to be non-poor than those
did not owned livestock, because when the agricultural production are not able to meet their
minimum requirement of food consumption and under the poverty line they can sale their
livestock as means of income and they can use the output derived from livestock such as milk
and milk products. Livestock are important source of income, food and rate of power for crop
cultivation. This indicates that household with more livestock produce more milk and milk
products and meat for direct consumption.

Table 7: The distribution of Livestock ownership of households

Number of Poor Non-poor Total population

livestock Number % Number % frequency Percentage
1-10 16 16% 30 30% 46 46%
11-20 5 5% 24 24% 29 29%
21-30 2 2% 23 23% 25 25%
Total population 23 23% 77 44% 100 100%
Source; computed from own survey, 2017

Besides, livestock enables the farm households to have better chance to earn more income from
selling livestock. Which enables them by increasing purchasing power of stable consumption
food during the condition of agricultural production is fail and could invest in purchasing of farm

33
inputs that increase food production, and able to ensuring the household gets the minimum
consumption determined by poverty line in the study area.

Oxen plays an important role for farming in study area as farmers in the mostly depends on
traditional farming method. Hence, oxen are an important factor of the production as it the
primary source of power for land cultivation. The number of household in Konso Woreda is
43902. According to this study we taken sample from 7% have one ox and 44% have more than
pair oxen while 49% did not own their oxen. Implies that those household who have their own
oxen are enough for plough and the probability being non-poor than those households who have
one oxen.

Table 8: The Ox ownership of Rural Sample Households in the Study Area

Response Yes/No Poor Non-poor Total population

Number % Number % frequency Percentage
Yes 7 7% 44 44% 51 51%
No 16 16% 33 33% 49 49%
Total population 23 23% 77 77% 100 100%
Source; own computed survey, 2017

According to the table 8 households are their oxen but poor and 44 respondents are non-poor in
responding yes. Among those respondent responds no 16 households are poor and the probability
of failing to poverty line very high and 33 respondents are non-poor and it meets the poverty
determined in the area.

Because those household who have only one and should find and other household just like him to
make it pair and it is difficult for one pair of oxen to serve households leading these households
to the condition to chance to be poor.

4.1.8 Vulnerability of Rural Households to poverty in study area

34
After generating estimated of the probability of being poor in the future, it is the important to
choose a vulnerability threshold. Following chaudhuri et (2002) the study considered two natural
threshold for the vulnerability estimated as discussed in the methodology part the observed
national poverty rate and threshold 50%. The ratio for the choosing a threshold of 50% has to do
with considering a household having at least an even chance of being poor in the next time
period. The employing a vulnerability threshold equal to the national poverty rate i.e. relative to
poverty means that household has an equal probability of national rate than typical household to
be poor in the next period. Using these two thresholds the study operationally defined household
to vulnerability if the predicted vulnerability level is greater than 0.5 highly vulnerable (HV), if
the vulnerability level is greater than 50% and moderate vulnerable (MV) if the vulnerability
level greater than poverty rate 0.24% but less than 50%.

Table 9: The vulnerability of Rural Households to Poverty in the study area

Vulnerabilit Frequency of Percentage Level of Vulnerability Average

y households Vulnerability

V<=0.24 57 57% Not vulnerable

0.24<V<0.5 33 33% Moderately vulnerable 0.24
V>=0.5 10 10% Highly Vulnerable
Total 100 100%
Source: own computed survey, 2017

As we can observe the above table indicates sample households 57% of total population are not
vulnerable and followed by 33% of the household are moderate vulnerable and the 10% of the
sampled household are highly vulnerable to poverty in the next period.

4.2 Estimation Results and Interpretation

In many developing countries poverty alleviation is widely acknowledged as the crucial policy
objectives of development. The assessment of poverty grouping who is poor or not, and
characteristics of these who are, have been the focal point of development scholars, however, in
thinking about suitable forward looking anti-poverty policy interventions, there is a need to
identify the vulnerability to poverty and through which anti-poverty policy will be effective upon
implementation.

35
The study would employ Chaurdhuri Model for the analyzing the determinant of vulnerability to
poverty by identify the household the probability to failing poverty in the future time by using
Ordinary Least Square (OLS) estimation Model and also employ logit model for analyzing the
determinants of rural households’ vulnerability poverty in study area.

The result of the estimated on determinants of rural household model is presented in table (10)
the coefficient of determination (pseudo R-squared) with value 0.5937 implies that nearly 60%
of the total variation in the in the household are due to the explanatory variables contributed
include in the model.

Family size: in line with expectation family size was found to have relation with poverty status
of rural household. Which is significant at 5% level confirms that household size exerts more
pressure on consumption that it contributes to production. The marginal effect shows as
household size increase the vulnerability to poverty also increase by same logic. If the member
household increase by one person other things remains constant the chance to being poor or
failing to food poverty line increased by 2.5%.

Education: education level of household determines the exposure of an individual with outside
world. It is linked with socio-cultural and demographic factor ether positive or negative
relationship with poverty line at 5% level of significance. However, the purpose of survey is
limited to income poverty. This implies that lower educational status aggravates the probability
of the poor households failing under the food poverty line in the study area.

The mean variance inflating factor (VIF) for the above regression analysis is 1.62 and this
implies that there is no problem of multicollinearity.

Table 10: Determinants of Rural Households Poverty in the study areas

36
 Poverty (1 for poor & 0 for non- Coefficient Robust stt. Err P>‫׀‬z‫׀‬
poor)
Age .029549505 .029549505 .318
Sex .5256866 .6695261 0.432
FAMILY SIZE .37445038 .1674084 0.025
EDUCATION LEVEL -.107259 .532466 0.044
LAND SIZE (CULTIVATE) -.5096523 .4957356 0.304
DMRT .000058617 .069522 0.933
FARM INCOME .0000549 .0000388 0.157
TLU .0350837 .636849 0.582
INFR .042875 .1033491 0.681
DEP-RATIO -5144565 .2102504 0.213
No OXEN -.4381752 .3519747 0.213
CONS- 1.091968 1.321474 0.409
Number observation = 100
Log pseud likelyhood.-45.561499 Wald chi2 (12) = 17.70
Prob chi2 = 0.1239
Psedu R2 = 0.1732
Source: Own Survey, 2017

Age of the household: has a negative sign and significant at 1%. This showing that an average
as the age household increase as vulnerability to poverty increase. This expected because as the
age the age head increase the household acquired more skill, experience and accumulate asset
that tends to decease vulnerability to poverty. If the average age of the household increase by one
year the probability of failing below the poverty line decrease by same amount but header ship of
household does not affects the vulnerability to poverty.

Land size: the cultivated land size which significant at 1% probability level. Has negatively
influence on the probability of household being poor in the study area. It implies that the
household being poor decrease with large size farm size. This agrees will hypothesis that farmer
who large farm associate with higher possibility to produce more food production. Households in
large size of land can have wealth and income and which increase availability of capital that

37
could increase the chance to investment in purchasing farm inputs which increase food
production and hence ensuring food securing of farm households. If the land size increase by one
additional hectare for cultivating farm other things remains constant the probability of being non-
poor increased by 0.6%.

Table 11: Determinants of rural households’ vulnerability to poverty

Vulnerability (V) Coefficient Standard Error P_Value

Age -0.1202481 .0393844 0.002
Sex -1.259983 .8722218 0.149
Family size -0.800892 .1613169 0.620
EDU -0.44589 .1223636 0.000
Land size (cultivated) -2.410722 .885388 0.006
Farm income 0.0081 .0000544 0.166
DMRT 0.236759 .0849672 0.781
INFR 0.365592 .1571275 0.020
TLU -0.9254431 .1039995 0.807
DEP-RATIO .68866 .474493 0.147
Number oxen -4.678426 .488898 0.339
Cos- 7.857408 2.110911 0.000
No observation = 100 LR chi2 (11) =80.71
Log likelihood -27.63700 Pro chi2 = 0.000
Pseudo R2 = 0.5937

Source: Own Survey, 2017

Education of household status: the educational status of the household head which reflects
prime role that human capital plays in determining the poverty. In fact education is an important
dimension of poverty itself, when poverty is broadly defined to include shortage capital and
knowledge deprivation escape from poverty in their adult age plays catalytic role for those who
are most likely to be poor, particularly those households living in rural communities. Education
is expected to leads to increases earning potential and tends to improve occupational and
geographic mobility of labor. Therefore, it deserves on important place in formulating poverty

38
reduction strategies. Educational status of household head is positively related with probability
of being non-poor and statistically significant at 1% level of significant. If the years of schooling
of household head increase by one year probability of being non-poor increased by 100% and all
other things citrus purpose the household head education increase by one year the household
head lies above the poverty line increased by 100%.

Infrastructure: it is the most important determinant for the rural hold vulnerable to poverty at
5% level statistically significance. The infrastructure were available rural areas the household
probability to being poor decreased by 2%. The marginal effect shows that all other things
constant, the infrastructure closed his farm the probability of being non-poor increased by 35.5%

CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

5.1. Conclusion

39
The study provided an assessment of rural household’s vulnerability to poverty in Ethiopia using
single visit cross sectional data from Konso woreda for year of 2017. Vulnerability was defined
at household level, within framework of poverty eradication, as the probability of household will
be consumption poor in the near future time. According to the, methodology proposed by
Chaudhuri et al (2002) was used for estimating household level vulnerability using cross
sectional data. Following estimation of vulnerability level for each household, OLS regression
was employed to find the correlates of vulnerability to poverty in the study area, and Logit model
was employed to analyze the determinants of rural households’ vulnerability to poverty in study
area. Based on this results obtained from the survey the following main conclusion are drawn.
And this paper have estimates the vulnerability of poverty household using 100 sample using
cross sectional data drawn and most there average 24% total population in near future is
vulnerable to poverty. The vulnerability of households positively significant correlated with large
family and dependent ratio. The regression result the on consumption model shows the
household welfare (consumption) significant associated with family size age of household head,
educational attainment, farm income, land size owned and asset property of household head. The
direction of variables different welfare of household’s consumption positively correlated farm
income, educational attainment, livestock unit, land size and other variables include in the model
which assuming the increasing the households consumption and the others vice versa.

Parallel to other studies the vulnerable population in the study area was found to be considerable
large than the number of currently poor. The predicted estimated result indicates that 10% of
households are highly vulnerable, substantial proportion household who were observed to non
poor, also entered the vulnerable category. It is logical to conclude that vulnerability more spread
on the study area.

From the finding of the study, education was found to key factor in reducing poverty. Poverty
and vulnerability was highest among the households headed by illiterate person, where
ashousehold headed by person having more than secondary level education observed to have low
incidence of poverty and vulnerability.

By some taken, the logit estimation results show that dependent ratio is one of the contributors to
probability being vulnerable to poverty. Moreover, the concluded that land size is one of the
most essential variables in determining vulnerability level of the household.

40
Some comparison was made one some important variables with aim of measuring inequality in
the study area. The study conclude that, there existing a high level of inequality among the
households interims of land size, educational service and consumption of income of them
vulnerability difference.

5.2 Recommendation
It has been observed that the different dimensions and cause of poverty are fast and complex,
poverty affects people of different ways, because they play different roles have different need
and faces different constraints among the both urban and rural area. It most likely that
households in extreme poverty differ from average and non-poor households in may distinct
ways such as in social service, demographic characteristics and socio-economic condition. So the
government might be design appropriate policies, strategies and practical steps that can take in
order to reduce the poverty and sustainable growth at rural and urban areas. One of these MDGs
is reduction of poverty and hunger. Currently poverty situation is global agenda. Thus, this paper
has tried to determinants of rural households vulnerability to poverty in rural households using
sample of 100 representative households on this the following recommendation was made.

Large family size and dependent ratio are founds to be some of the factor that contributes for
sever poverty. Hence, the government and NGOs, particularly operating at local level might be
design some implementation program to put the already endorsed and existing population policy
in to effect. To this end, a focus on family planning and integrated health service and education
provisions must catch the attention of decision making bodies. Most poor households did not
have participate in off- farm income which has great potential to assist them to graduate from
poverty. It recommended that households with off-farming income are better and endowed with
better and additional income, thus government might create non- farm jobs for rural households.
And also livestock is considered as asset which is liquid a security against crop failure. They
help to plough fields and provide means of transportation so in order to strength their benefit for
poor technical advice and training how to use livestock should offer to make them above poverty
line. Most poor households are small size for cultivating so government might be equal
distribution of land among the poor and non-poor better in researcher opinion.

This study further recommends the importance of coming with profile of vulnerability in
Ethiopia. It is highly suggested that the Ethiopia statistical system to adopt way to institutionalize

41
vulnerability measurements and measure trends in vulnerability, aside from providing ex-ante on
the incidence of poverty. Providing exclusive evidence at national level might increases the
efficiency and effectiveness of measures to take poverty. It is keep to give the total problem by
studying vulnerability at one place.

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44
45
APPENDIX : Estimation result
. logit v2 age sex fs edu ls fy dmrt infr tlu dpr noxen

Iteration 0: log likelihood = -68.0292

Iteration 1: log likelihood = -30.478436
Iteration 2: log likelihood = -27.796212
Iteration 3: log likelihood = -27.637485
Iteration 4: log likelihood = -27.637004
Iteration 5: log likelihood = -27.637004

Logistic regression Number of obs = 100

LR chi2(11) = 80.78
Prob > chi2 = 0.0000
Log likelihood = -27.637004 Pseudo R2 = 0.5937

v2 Coef. Std. Err. z P>|z| [95% Conf. Interval]

age -.1202481 .0393844 -3.05 0.002 -.1974402 -.043056

sex -1.259983 .8722218 -1.44 0.149 -2.969507 .4495399
fs -.0800892 .1613169 -0.50 0.620 -.3962646 .2360862
edu -.4459589 .1223636 -3.64 0.000 -.6857871 -.2061306
ls -2.410722 .885388 -2.72 0.006 -4.146051 -.6753932
fy .000081 .0000584 1.39 0.166 -.0000335 .0001955
dmrt .0236759 .0849672 0.28 0.781 -.1428568 .1902086
infr .365592 .1571275 2.33 0.020 .0576277 .6735562
tlu -.0254431 .1039995 -0.24 0.807 -.2292783 .1783921
dpr .6886666 .474493 1.45 0.147 -.2413227 1.618656
noxen -.4678426 .4888908 -0.96 0.339 -1.426051 .4903658
_cons 7.857408 2.110911 3.72 0.000 3.720098 11.99472

46
. mfx

Marginal effects after logit

y = Pr(cal) (predict)
= .16664394

variable dy/dx Std. Err. z P>|z| [ 95% C.I. ] X

age -.0040962 .00414 -0.99 0.323 -.012216 .004024 40.23

sex* -.0808784 .11309 -0.72 0.474 -.302523 .140766 .8
fs .0520087 .0232 2.24 0.025 .006541 .097477 6.71
edu -.0148955 .00703 -2.12 0.034 -.02868 -.001111 3.8
ls -.0707773 .06643 -1.07 0.287 -.200981 .059427 1.1425
dmrt .000814 .00963 0.08 0.933 -.018055 .019683 6.346
fy 7.63e-06 .00001 1.42 0.154 -2.9e-06 .000018 4895.58
infr .0059004 .01443 0.41 0.683 -.022379 .03418 3.3175
tlu .0048722 .00858 0.57 0.570 -.011952 .021696 6.948
dpr .0242149 .06241 0.39 0.698 -.098107 .146537 1.0833
noxen -.060851 .04485 -1.36 0.175 -.148764 .027062 1.01
adeqs -.0715139 .02736 -2.61 0.009 -.125135 -.017893 5.9317

(*) dy/dx is for discrete change of dummy variable from 0 to 1

Logistic regression Number of obs = 100

Wald chi2(12) = 17.74
Prob > chi2 = 0.1239
Log pseudolikelihood = -45.561499 Pseudo R2 = 0.1732

Robust
cal Coef. Std. Err. z P>|z| [95% Conf. Interval]

age -.0294961 .0295505 -1.00 0.318 -.0874141 .0284218

sex -.5256866 .6695261 -0.79 0.432 -1.837934 .7865605
fs .3745038 .1674084 2.24 0.025 .0463894 .7026182
edu -.107259 .0532466 -2.01 0.044 -.2116204 -.0028976
ls -.5096523 .4957356 -1.03 0.304 -1.481276 .4619716
dmrt .0058617 .0695224 0.08 0.933 -.1303997 .1421231
fy .0000549 .0000388 1.41 0.157 -.0000212 .000131
infr .0424875 .1033491 0.41 0.681 -.1600729 .245048
tlu .0350837 .0636849 0.55 0.582 -.0897364 .1599038
dpr .1743665 .4494504 0.39 0.698 -.7065401 1.055273
noxen -.4381752 .3519747 -1.24 0.213 -1.128033 .2516825
adeqs -.5149565 .2102584 -2.45 0.014 -.9270555 -.1028575
_cons 1.091968 1.321474 0.83 0.409 -1.498073 3.68201

47
. vif

Variable VIF 1/VIF

tlu 3.12 0.320819

noxen 2.90 0.344684
age 1.50 0.664890
ls 1.49 0.669453
fs 1.38 0.724328
fy 1.37 0.728109
infr 1.27 0.788434
dmrt 1.25 0.799613
edu 1.24 0.809143
sex 1.24 0.809191
dpr 1.09 0.915603

Mean VIF 1.62

48