Building Resilience through Social Protection: Evidence from Malawi

Abstract

We apply a well-known resilience index developed by the FAO to data from a cash transfer evaluation in Malawi to address two key questions: Is the FAO index a valid measure of resilience? Can an unconditional cash transfer significantly boost household resilience? Our answer to both these questions is affirmative. The resilience index positively predicts future positive coping behaviour among households (predictive validity) and is a stronger predictor of future coping than consumption or assets. We then find that the unconditional cash transfer increased the resilience index by 12 points, or 30 per cent over the baseline mean index value. Results imply that small, regular, predictable cash transfer payments to ultra-poor households not only protect current consumption but can also build resilience and protect against future shocks.