Livestock as Insurance and Social Status: Evidence from Reindeer Herding in Norway

The theory of livestock as a buffer stock predicts that agropastoralists facing substantial risks will typically use liquid assets such as livestock for self-insurance to smooth consumption. This paper examines this hypothesis for reindeer herders in Norway where the herders, in contrast to pastoralists in, say, sub-Saharan Africa, face well-functioning credit markets. Using survey data including slaughter responses to a hypothetical meat price increase, we test whether keeping reindeer as insurance against risks affects the slaughter response. Furthermore, we examine whether status motives for keeping large herds affect the harvest response to a changing slaughter price. As a background to the empirical analysis, a stochastic bioeconomic model describing Saami reindeer herding is formulated.