Scared to be poor: Vulnerability and poverty in Great Britain at the beginning of the 20th century
Author(s): Federica Di Battista
JEL Classification: C14, I31, I32, N33
This work explores the determinants of poverty in Edwardian Britain. We use a new household budget sample collected between 1900 and 1914 to understand what role vulnerability played in determining poverty and undernutrition. First, using a probit model we find that due to perceived risk on one hand, and to social norms on the other, families purchased insurance schemes as a strategy to cope with uncertainty. Second, using recursive mixed process estimation, we find that the decision to insure caused a reallocation from food to precautionary expenditures, which led to a significant reduction in calorie availability.
Keywords: 1900-1914, Great Britain, insurance, poverty, vulnerability