The relationship between the transition of income poverty and asset base of a household: a multinomial logistic regression analysis

This paper examines the relationship between the transition of income poverty and development of asset base of a household using the data from a randomly selected sample of 170 beneficiaries of the Samurdhi (prosperity) Development Programme (SDP) in the Ratnapura District of Sri Lanka during the period from 1995 to 2009. The study was conducted categorising households into “poverty levels” and “poverty groups” in order to examine how and to what extent the development of five capital assets (namely natural, physical, human, financial and social capital ameliorated by the SDP) were related to the dynamic nature of the income poverty level of a household. Multinomial logistic regression analysis was used to understand the relationship between the transition of income poverty and development of asset base of a household. Results confirm that those who were unable to develop natural, physical and human capital assets were more likely to remain in vulnerable poverty for a long period, and the mean probability of a household falling into this category was as high as 0.68. The study concludes that strengthening the asset base of beneficiaries of SDP is pivotal to alleviate their poverty.