Assessment of income shock and households’ vulnerability provides an excellent way of designing appropriate marginal reforms to tackle welfare
problems among some vulnerable groups. This study used the three stage Feasible Generalized Least Square (FGLS) to analyze expected poverty in
Nigeria, using the 2004 NLSS data. It was found that high agricultural input price and lack of capital to expand own business were experienced by the
largest proportion of the households. Also, high vulnerability was displayed by rural areas, states like Jigawa, Kebbi, Zamfara, Yobe, Kogi, Taraba,
Sokoto, male-headed households, large family and large number of dependants. It was recommended that to reduce chronic and transient poverty,
appropriate marginal reforms targeted at vulnerable groups in rural areas and specific zones of the country should be designed.