SOCIAL CAPITAL AND COPING WITH ECONOMIC SHOCKS: AN ANALYSIS OF STUNTING OF SOUTH AFRICAN CHILDREN
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South African households live in an environment characterized by risks, and
many face a significant probability of experiencing economic losses that threaten their
daily subsistence. Using household panel data that include directly solicited information
on economic shocks and employing household fixed-effects estimation, we explore how
well households cope with shocks by examining the effects of shocks on child nutritional
status. Unlike in the idealized village community, some households appear unable to
insure against risk, particularly when others in their communities simultaneously suffer
large losses. Households in communities with more social capital, however, seem better
able to weather shocks.