In the wake of an income shock, a household will reallocate and transact its many types of
assets—including livestock, land, labor, and cash—with the dual objectives of maintaining a
minimum level of current consumption and protecting its prospects for future consumption.
Clearly, the inability of a household to maintain a subsistence level of consumption represents an
immediate catastrophe. On the other hand, permitting shocks to compromise prospects for future
consumption threatens a household in a different way: if such shocks occur with regularity, each
event can slowly drag the household deeper into poverty. Poorer households, it appears, are not
able to perfectly smooth present consumption; nor are they able to fully protect future
consumption. For these households, the effects of 'bad' seasons may be transmitted into the
future via depleted assets and the diversion of resources from the most remunerative activities.