Rural Livelihood Diversification Index

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.