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, par- ticularly, 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.