Vulnerability and poverty in Timor-Lesté

Economists have long recognized that a household's well-being depends not just on its average income or expenditure, but also on the risks it faces. Hence vulnerability is a more satisfactory measure of (inadequate) welfare than poverty. We measure vulnerability as expected poverty and establish the importance of its determinants, for Timor Leste' based on the 2001 Living Standard Measurement Survey. The incidence of inadequate food consumption and vulnerability to food inadequacy are more severe than overall poverty and vulnerability to poverty. Poverty and vulnerability in Timor-Leste' is largely a rural phenomenon. Policy options to reduce vulnerability are also discussed.