Abstract
It is often said that poor rural households in developing countries remain inadequately insured against shocks. Using panel data from Tawahka Amerindians in the Honduran rainforest, a horticultural/ foraging society, we estimate the consumption-smoothing ability and vulnerability to risks of 32 households in two villages with varying degrees of market openness. The information was collected using cultural anthropology methods, and key variables were estimated through direct observations and physical measures to reduce measurement errors. Results suggest that household consumption is directly affected by income shocks, despite the practice of partial insurance and risk-sharing within communities. In a comparison between the villages, we find evidence that households practice distinctly different consumption-smoothing behaviors, partly driven by their gap in economic development.