Methodology and Key Concepts
The Household Economy Analysis (HEA) was developed in the early 1990s as an approach to measure and predict shortterm changes to food access. Since this time, HEA has focused on how households make ends meet from one year to the next and the assets they rely on that enable them to do so. This includes how they survive, or fail to survive, through difficult times. Understanding local livelihoods provides insight on how to appropriately address short-term food and livelihood security needs and informs decision-makers on whether or not medium- or long-term interventions will support or undermine existing strategies. The evolution of HEA has led the way to expand its application across the development and humanitarian spectrum. HEA has been used to address questions related to disaster response, resilience and rehabilitation, early warning and scenario analysis, development planning, and monitoring and evaluation.
In practice, the HEA analytical framework comprises two components: the baseline component and the outcome analysis component, as described in Figure 1 above. The baseline component has three steps: a livelihood zoning, a wealth breakdown, and an analysis of livelihood strategies for each of the identified wealth groups. Livelihood zoning is the process of dividing geographic areas within which people broadly share the same patterns of access to food (e.g., they grow the same crops, keep the same types of livestock). They also broadly share the same access to markets. Patterns of livelihood clearly vary from one area to another. Local factors such as climate, soil, and access to markets all influence livelihood patterns. Therefore, the first step in the HEA is to prepare a livelihood zone map.
Where a household is situated is one factor that determines options for obtaining food and generating income. Another factor is wealth, which dictates a household’s ability to exploit the available options within a given zone. Generally, households that cultivate 1 hectare of land harvest more than their neighbors who only cultivate 0.25 hectares. In pastoral areas, households that own 50 heads of cattle have greater access to milk than those that own five heads of cattle. Defining the different wealth groups in each zone is the second step in the HEA, the output from which is a wealth breakdown.
The third step — analyzing livelihood strategies — generates a quantified account of food, income, and expenditure patterns for typical households in each group for a defined reference or baseline year. Food access is expressed as a percentage of minimum energy requirements, taken as an average of food energy intake of 2,100 kilocalories (kcals) per person per day. Annual income earned by the household is balanced with expenditure, allowing the interview to capture a reliable account of the different income activities in which each household is engaged.
A central aspect to HEA is that quantification takes place by converting all food and cash sources to a standard measure.
It adds up all the sources of food and all the sources of cash income that households generate in the reference year and uses either a food or cash equivalent to express the total value. This composite of food and cash income is referred to as “total income.” By converting to a common currency, such as calories, we are able to compare food access across wealth groups, livelihood zones, and even countries.
The second component of the HEA analytical framework is the outcome analysis. Outcome analysis investigates how baseline access to food and income might change as a result of a specific hazard, such as drought or flood, and the consideration of the extent to which households will be able to meet their basic survival needs and protect their livelihoods following the hazard.
Like the HEA baseline, the outcome analysis also includes three steps: analyzing the economic impacts of the hazard on food and income sources (i.e., the problem specification), analyzing the coping/response strategies for households living in the zone; and measuring the resulting situation (projected outcome) with reference to two different thresholds.
The problem specification is the fourth step in the HEA analytical framework. This step translates a hazard into economic consequences that can be mathematically linked to household-level baseline information on food and income options or expenditure items. After defining the problem and calculating its magnitude for each of the relevant aspects of the baseline picture, step 5 is an analysis of the response strategies that different types of households will employ to try and deal with the problems they face. This is a quantified analysis of households’ ability to diversify and expand access to various sources of food and income and thus to cope with a specified hazard.
The final step, projected outcome, is a systematic attempt to determine where different households fall in relation to clearly defined intervention thresholds. It is an analysis designed to set forth, with the best available evidence, a clear picture of which groups of households will be unable to respond on their own to a shock without using strategies that would undermine either their health or their longer-term welfare.
The objective of outcome analysis is to investigate the effects of a hazard on future access to food and income, so that decisions can be taken early on about the most appropriate types of interventions to implement. The rationale behind the approach is that a good understanding of how people have survived in the past provides a sound basis for projecting into the future. Three types of information are combined: 1) information on baseline access, 2) information on hazard (i.e., factors affecting access to food/income, such as own production or market prices), and 3) information on response strategies (i.e., the sources of food and income that people turn to when exposed to a hazard). The approach can be summarized as follows: Baseline + Hazard + Response = Outcome
The two thresholds that are used to determine whether the total income after coping is sufficient to meet household needs are the survival threshold and the livelihoods protection threshold. The survival threshold represents the costs to cover minimum survival requirements, including minimum food (2,100 kcal per person per day), water (if purchased in the zone), and the means to prepare food. If people cannot meet the survival threshold, their lives are at risk. This threshold is fairly standard across livelihood zones, with the exception of water, which is often not purchased but collected. The second threshold is the livelihoods protection threshold, which includes the cost of survival as well as basic education, health, productive inputs, and minimum household items purchased in an average year. This threshold will vary across livelihood zones and wealth groups because of differences in production costs (e.g., a wealthy pastoralist with 100 cattle will have very different input requirements than a poor household living in a cropping area.) the livelihoods protection threshold is the standard threshold used to determine whether humanitarian assistance is required. If households cannot cover these costs, an intervention to protect livelihoods — which is crucial for next year’s survival — should be launched.