Household economic portfolios

Due to the fungibility of credit, we need a conceptual approach, and a related methodological approach, which encompasses three levels of analysis: the individual, the enterprise, and the household. The approach must be flexible enough to accommodate the fact that the household may be engaged in more than one enterprise. The purpose of this paper is to review different approaches to analyzing the household and to present a conceptual model of the household economic portfolio that will facilitate analysis at all these levels. More specifically, the model is intended to inform the design of the USAID project on Assessing the Impacts of Microenterprise Services (AIMS). The model of the household economic portfolio proposed in this paper builds on the three key developments in the analysis of households by economists, anthropologists, and feminist scholars. That is, it recognizes that there may be negotiation, bargaining, and (even) conflict within the household; it presents the household as a permeable unit, rather than a bounded unit, which is embedded in wider social units, networks, and processes; and, it recognizes that there is enormous variability in household composition, structure, and functions both between and within societies and over time. More specifically, the model distinguishes several cross-cutting divisions within the household, including market versus nonmarket spheres of production and male versus female domains of resources, activities, and power (as well as other socially defined hierarchies). Further, the model assumes that household decisions and activities regarding production, consumption, and investment are affected by the interplay of several levels of organization: the individual, intrahousehold relationships, the household as a whole, and suprahousehold groups and networks. And, finally, the model recognizes that there is a continuum of possible intrahousehold arrangements, including pooled-to-nonpooled income, joint-to-separate preferences, cooperative-to-conflictual bargaining, and joint-to-separate allocation of time and resources. Recognizing these complexities, the household portfolio model represents household behavior as a circular flow between various household resources and activities and across various household domains and constituent groups. Under this model, the resources of the household are allocated to the various household activities by individual household members acting jointly or separately. And the activities of the household - consumption, production, and investment - act to satisfy shared or competing current needs of the household members and return resources to the household (or to individual members) for use in future periods. Because credit is one important type of microenterprise service, the model is designed to track the use of credit by the household. In tracking the use of credit, we assume that credit is fungible and that it may be allocated to a number of uses. The paper concludes with the implications from the literature review and the proposed model of the household economic portfolio for the design of the AIMS core impact assessments. Hypotheses are recommended which center on changes in the set of household activities and in the flow from activities to resources and on changes at the individual level. (Author abstract)