This paper uses panel data from rounds VÐIX of the Russian Longitudinal
Monitoring Survey (RLMS) to examine the extent to which households are able to
protect their consumption from fluctuations in their income.
It is found that consumption is only partially protected from idiosyncratic shocks
to income with food consumption being better protected than non-food consumption
expenditures. This suggests that adjustments in non-food expenditures may be
an important component of the risk management tools of Russian households. The
analysis also provides evidence on the extent and nature of the coping strategies
adopted by households. It is demonstrated that households complement their selfinsurance
strategies, of borrowing, adjusting their labour supply, and selling assets,
with informal risk sharing arrangements with households within their community.
An examination of the role of sample selection confirmed that these findings are
quite robust to this potential source of bias. Furthermore, accounting for the role
of measurement and imputation errors in the measure of household income
revealed that OLS estimates may yield a misleading picture about the extent to