Understanding the ability of households to cope with economic shocks: an empirical study of Pakistan during the COVID-19 pandemic.

Abstract

Background: The COVID-19 pandemic presented unprecedented challenges to households throughout the world, particularly in low- and middle-income countries. Pakistan's COVID-19 management policies have been widely recognized for their effectiveness at both national and international levels.

Objective: In this study, we empirically examine households' response to external shocks, such as the COVID-19 pandemic, and the coping mechanisms adopted at the household level in Pakistan.

Methods: Based on Rational Choice Theory, the research examines 3456 households, encompassing both urban and rural areas, using official survey data from the National Bureau of Statistics of Pakistan. The study utilizes the logit model for the estimations.

Results: The findings show that substitution for low-quality food sources is the most common coping mechanism and closely impacts food security. Interestingly, the study revealed that, except for bank loans, none of the coping mechanisms significantly reduced the likelihood that families would experience severe COVID-19 effects.

Conclusions: The findings of the study underscore the complexities of responding to a multifaceted crisis such as the pandemic. This research contributes essential insights into the evolving discourse on pandemic resilience, recovery strategies, and anticipated similar shocks.