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	Rural Livelihood Diversification Index	Agricultural Household Model
Field	Food Agriculture Studies	Food Agriculture Studies
Family	Process / pipeline	Regression model
Year of origin	2000	1986
Originator	Frank Ellis (rural livelihoods framework)	Inderjit Singh, Lyn Squire & John Strauss
Type	Descriptive concentration/diversity index pipeline for income sources	Structural production-consumption household model with separability testing
Seminal source	Ellis, F. (2000). Rural Livelihoods and Diversity in Developing Countries. Oxford: Oxford University Press. ISBN: 9780198296966	Singh, I., Squire, L., & Strauss, J. (Eds.). (1986). Agricultural Household Models: Extensions, Applications, and Policy. Baltimore: Johns Hopkins University Press for the World Bank. ISBN: 9780801932489
Aliases	Livelihood Diversification Index, Income Diversification Index, Simpson Index of Income Diversification, Herfindahl Diversification Measure	Farm Household Model, Singh-Squire-Strauss Model, Non-Separable Household Model, Agricultural Household Production-Consumption Model
Related	3	3
Summary	A rural livelihood diversification index summarises, in a single number, how spread out a household's income is across different sources and activities — farming, off-farm wage labour, self-employment, remittances, transfers — rather than concentrated in one. Grounded in Frank Ellis's rural livelihoods framework, which defines diversification as the process by which rural households construct an increasingly diverse portfolio of activities to survive and improve their living standards, the index borrows concentration measures such as the Herfindahl and its Simpson complement from ecology and industrial economics. A household relying wholly on one crop scores as undiversified and exposed; one drawing evenly on many sources scores as highly diversified and, often, more resilient.	The agricultural household model treats the farm household as a single unit that is simultaneously a producer and a consumer, choosing how much to grow, how much labour to hire or supply, and how much to consume — decisions that ordinary firm theory and consumer theory treat as separate. Synthesised in Singh, Squire, and Strauss's 1986 World Bank volume, the model's central result is conditional: when all markets (especially for labour) function perfectly, the household's problem is recursive — it maximises farm profit first and then spends that profit like any consumer, so production decisions are independent of preferences. But when markets fail, the two sides fuse: a shadow wage replaces the market wage and household composition begins to drive production. Whether that separation holds is an empirical question, and Benjamin's 1992 Econometrica test is the canonical way to answer it.