1. Introduction
Assets are well-recognized as playing a determinant role in reducing the variability of consumption in developing countries’ environments characterized by income risk and the absence of sound credit markets [1]. For example, Rosenzweig and Wolpin [2] and Swinton [3] have shown that the sales of livestock can help households to maintain consumption following adverse income shocks. Besides, alternative levels of education affect an individual’s holdings of assets [4]. In the specific case of Ghana, Aryeetey [5] has found that livestock seems to be favored most among those with a little education while avoided by those with no or high levels of education. Differences in education levels seem to be associated with the composition and types of assets owned by households [4,5].
These observations are the starting point for this study. We examine the association between education levels and asset ownership using data from the 1994-1995 First Senegalese Household Survey (Enquête Sénégalaise Auprès des Ménages, commonly known as ESAM-I), the 2001-2002 Second Senegalese Household Survey (Enquête Sénégalaise Auprès des Ménages, commonly known as ESAM-II) and the 2005 Senegal Poverty Monitoring Survey (Enquête de Suivi de la Pauvreté au Sénégal, commonly known as ESPS-2005). The main idea behind the principal objective of the study is that since education is well-known to provide productive and allocative skills and positively impacting on individuals’ well-being, more educated people are expected to own assets with comparatively high returns. We compare the association between each of our education levels (primary, secondary and university education) and the four categories of assets owned by households namely the savings, house, car and households durables related assets1. This allows understanding as to what extent education can help households diversify their assets and to which types of assets educated individuals are likely to invest. The results of this study are indicative in the sense that we lack data on various other productive assets (livestock, for example) and the disaggregated savings.
Although studies on the association between education levels and asset ownership are scarce, especially for the case of developing countries, researchers have tried to investigate the question. For instance, Bradley and Graham [4] have used a sample of young married couples in Illinois to determine to what extent differences in the composition of assets can be explained by the differences in educational background. Through a descriptive data analysis, Aryeetey [5] has also explored the characteristics of households and asset holdings in rural Ghana. The correspondence between asset types and education of the head of household shows that more educated people are more likely to hold their assets in the form of land and non-farm enterprise assets. To the knowledge of the author, the association between education levels and assets’ holdings is not empirically examined in the case of developing countries in general and the case of Senegal in particular.
Senegal can be a useful study case because it is fairly representative of other low income countries with an economy mainly based on the primary sector with approximately more than 70 percent of the population in the agriculture. Senegal can be representative of most of West African countries with the majority of populations’ holdings in the form of durables, land and livestock related assets.
The paper proceeds in five sections. Section 2 gives some background information about the relation between assets and poverty; and education and assets. Section 3 presents an overview of the state of selected assets ownership in Senegal. Section 4 specifies the econometric model, describes the data sources and estimation method. Section 5 presents the empirical results. The last section concludes the paper.
2. Background
2.1. Asset and Poverty
Academics and practitioners have started to investigate the relationship between asset and poverty in the 1980s [6]. However, the various studies are mainly related to developed countries in general and the United Stated in particular. Grosso modo, two views can be distinguished: on the one hand, the supporters of asset-based welfare and on the other hand, the critics of the asset-based welfare [7].
Various arguments are advanced in favor of the view that assets can help reduce poverty. One argument is that asset-ownership yields an independent “asset-effect”, meaning that it urges individuals to save more and act in a more responsible manner [7]. That is, owing an asset creates an orientation toward the future [6]. This rationale is also shared by Sherraden [8] when he notes that owing assets provides a cushion against risk and usually makes it possible to acquire more assets. Another argument with respect to the role of assets in reducing poverty is their preventive as well as curative capabilities [8]. In fact, this view means that owing an asset can help individuals to not fall into poverty and the already-poor to easily escape from it.
Assets are a proxy for well-being. This view is also closely related to the asset-based welfare. In fact, asset is considered as a proxy for well-being in the sense that the stock of wealth an individual holds (and not just the income and consumption) should be seen as important when assessing the well-being [9].
It is to be noticed that, though the evidence on the asset-ownership reducing poverty capabilities is still modest, Gamble and Prabhakar [7] has reviewed the literature and suggested that there are reasons for thinking on the important role of assets. Given the association between assets and poverty as well the assimilation of assets to wealth and wellbeing, it is necessary to look at the main factors influencing their ownership. Although factors such as the policies designed to facilitate the ownership of assets and the transfers such as bequests are determinant for the asset ownership, we focus on the role of education and some main households’ characteristics.
Figure 1 describes the approach underlying the association between education and assets ownership in this study. In fact, the figure shows that education can affect poverty status through an increase of income (we called it market or pecuniary effect of education). This approach means that education increases the productivity of individuals who in turn get higher wages that can help them get out of poverty. This relationship is depicted by the bold line from education to poverty. On the other side, education can also influence the status of poverty through nonmarket or non-pecuniary channels such as, among other factors, the assets ownership and health status. In addition, it is possible to have an alternative reading of Figure 1. In fact, the assets and income constitute the wealth of individuals. Insofar as education affects wealth which in turn determines the poverty status of the households, we can think of the relationship between education and poverty as acting through the assets’ channel. This approach is shown in Figure 1 by the dashed line.