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Abstract
The concept of a livelihood strategy has become central to development practice in recent years.
Nonetheless, precise identification of livelihoods in quantitative data has remained methodologically
elusive. This paper uses cluster analysis methods to operationalize the concept of livelihood strategies in
household data and then uses the resulting strategy-specific income distributions to test whether the
hypothesized outcome differences between livelihoods indeed exist. Using data from Kenya’s central and
western highlands, we identify five distinct livelihood strategies that exhibit statistically significant
differences in mean per capita incomes and stochastic dominance orderings that establish clear welfare
rankings among livelihood strategies. Multinomial regression analysis identifies geographic, demographic
and financial determinants of livelihood choice. The results should facilitate targeting of interventions
designed to improve household livelihoods.