Understanding wealth transitions among households in urban slums of Nairobi: A multi-state transition modelling approach

Abstract

Disparities in wealth are socially undesirable and may result in economic inequalities that have destabilizing effects on communities. Globally, more than 700 million people who live in extreme poverty still struggle for the most basic human needs. It is important to note that poverty is not static as households and individuals may transition from one wealth state to another with the passage of time. As such, the examination of poverty levels at one point does not offer a sufficiently complete picture of the dynamics in states of wealth through the dimension of time. In this paper, we study transitions in wealth status of households in two informal settlements (slums) in Nairobi, Kenya from 2006 to 2015. We employed the multistate transition model to assess the influence of potential risk factors on wealth transitions for households in urban slums. The results of the analysis indicate that slum areas, age of the household head, ethnicity, gender, household ownership type, food security, and household size have an effect on at least one transition between wealth states. A considerable proportion of households still remain in the lowest and middle wealth states. Households were found to easily transition forward, from the lowest to the highest wealth state than the reverse transition. The estimated mean sojourn times for the lowest, middle and highest wealth tertile were approximately 10, 7, and 14 months, respectively. These highlights the need for interventions that reduce the time spent in the lowest and middle wealth tertile while ensuring retention of households in the highest tertile. Our findings underscore the need for policy options around the provision of economic opportunities with targeted attention to households in vulnerable settings.