The HEA was developed on the principle that information on events that beset a particular area or community – late rains, land reform, rising food prices - can only be properly interpreted if seen against the context of how people normally live. For instance, households that depend on their own production for much of their food needs will be affected by crop failure more severely than households that buy more of their food using income gained from casual employment in the towns. An understanding of people’s livelihoods is therefore essential for analysing the impact of any significant positive or negative change on households.
At the heart of HEA is a depiction of how people get by from year to year and of the connections with other people and places that enable them to do so. This is called the Baseline and has three components: livelihood zoning, a wealth breakdown and an analysis of livelihood strategies for each of the identified wealth groups.
The Outcome Analysis is the investigation of how that baseline access to food and income might change as a result of a specific hazard such as drought or as the result of a positive change, such as a program input or beneficial price policy.
The figure below is the Household Economy Analytical framework which shows how these two components integrate to create a holistic view of livelihoods and the impact that a positive or negative change may have on these livelihoods.