A moderate share of income fluctuation is explained in the report by district variables and a far greater share by village-level variables. Consumption risks in these households were only partially mitigated by sharing through family networks. Income risks were also reduced by the diversification of income sources. Households in rural Pakistan clearly use savings and credit markets to stabilize consumption. For example, although incomes are seasonal, there are no statistically significant seasonal patterns of food consumption in any of the sample districts.
Households also save or draw on their savings as a result of transitory annual income fluctuations.
Similarly, in response to a temporary decrease in income, households borrow or reduce assets to cover about 70 percent of a shortfall. Even low-income households manage to save half of their transitory income increases, although they save only 10 percent of the overall income. No evidence of seasonal differences in calories consumed is detected, although the composition of grains consumed in one region changed with the seasons. Households generally coped with seasonal lows by using savings, including storage of grains. In these households, the effects from fluctuations in crop production are mitigated by the great diversity in income sources.