The Costs of Consumption Smoothing: Less Schooling and Less Nutrition

Abstract

Using novel micro data, we explore lifecycle consumption in Sub-Saharan Africa (SSA). We find that households' ability to smooth consumption over the lifecycle is large, particularly, in rural areas. Interestingly, consumption in old age is sustained by shifting to self-farmed staple food, as opposed to traditional savings mechanisms or food gifts. This smoothing strategy entails two important costs. First, there is a loss of human capital as children are diverted away from school and into producing self-farmed food. Second, a diet largely concentrated in staple food (e.g., maize in Malawi) in old age results in a loss of nutritional quality for households headed by the elderly.

Keywords: Consumption, Smoothing, Lifecycle, Self-Farming, Schooling, Nutrition, Sub- Saharan Africa

JEL Classification: E21, O11, R20