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Income diversification

Income diversification is a measure of household’s income generation from multiple sources. This livelihood strategy is observed among households and may insure food security in times of production or weather risk.


Computation of this index is data intensive and may complicate measurement where data on income may be difficult to enumerate for labor or where data quality issues abound. Ersado (2003) recommends an alternative simple measure of the number of income sources per household.  Although it does not take into account the share of each income source, it provides a count of the number of income sources that household has. This may be enumerated by simply listing the income sources and asking the household to indicate which of those are activities from which the household obtains income.  The maximum value of this index will be the number of activities listed.

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