Household Decision-Making Under Threat of Violence: A Micro Level Study in the Chittagong Hill Tracts of Bangladesh

Abstract

We analyze rural household livelihood and children’s educational investment decisions in a post-conflict setting located in the Chittagong Hill Tracts region of Bangladesh. The study represents a contribution to the microeconomic analysis of conflict. Another innovation of the paper lies in the fact that we employ information about subjective perceptions of violent experiences, which is in turn used to explain household economic decision making. Heightened subjective perceptions of violence lower consumption expenditure, but it can raise land use intensity, and more risky mixed crop cultivation. In some case experiences of displacement and other violence raises the likelihood of households sending children to school. This indicates that a specific post-conflict ‘phoenix’ factor may be in operation, even without substantial infrastructure reconstruction. Also, the trauma emanating from actual past experiences combined with current high perceptions of risk of violence after an imperfect accord ending a low-intensity conflict may make people bolder and more risk taking in order to enhance their long-term future. We, therefore, also make a contribution to the literature on a non-linear relationship between violence and the temporal patterning of livelihood decision-making.

Keywords: Micro-Analysis of Post-Conflict Situations, Risky Rural Livelihood Decisions, Subjective Perceptions of Violence, Livelihoods, Conflict, Risk, Land Use, Schooling

JEL Classification: D72, D74, O10, O40