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Aspirations and Poverty in Rural Ethiopia

Tanguy Bernard (Bordeaux/IFPRI)

Stefan Dercon (Oxford/DFID)

Kate Orkin (Cambridge)

Alemayehu Seyoum Taffesse (IFPRI)

Presentation at the Africa Development Bank

24 February 2015, Tunis and Abidjan (by VC)

Do people’s aspirations – their goals or preferred end or boundary states

with respect to a relevant domain of choice – affect whether they invest?

Evidence that:

Poorer individuals seem to have lower aspirations;

Individuals in poorer communities have lower aspirations

Panel data used, thus claim to causal link; but happy to consider

them as correlations;

Summary

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Randomly assign Ethiopian farmers exposed to the lives of four role

models.

Treatment = one hour of documentaries.

No other intervention.

Very good balance at baseline across groups

Key findings:

Improvements in aspirations after screening and after six months.

Changes in related psychosocial characteristics (LoC), but not risk aversion

or time preferences.

Small improvements in savings, demand for credit, children’s school

enrolment and spending on schooling 6 months after screening.

Policy implications

Better design programs for poverty reduction, social protection

Africa – young entrepreneurs; Chile – government program aspirations

Summary

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Motivation

Aspirations

Field experiment – design and findings

Report on the direct effects on aspirations;

Summarize results related to beliefs, preferences, and future-oriented

behaviour;

Policy significance

Outline

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Motivation - Initial

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Fatalism

Examples:

“We live only for today”;

“It is a life of no thought for tomorrow”;

“We have neither a dream nor an imagination”

Rahmato and Kidanu (1999)

General - lack of proactive and systematic effort to better one’s own

life;

Economic perspective – not making the ‘investments to better one's

life’.

Motivation – why do poor people underinvest?

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Underinvestment by the poor – a source of persistence in poverty and

inequality

Conceptual – ‘opportunities’, fatalism

Focus 1 - ‘external circumstances’ and ‘opportunities’.

Low returns to investments;

Unexploited opportunities due to lack of information or

knowledge;

Social constraints;

Focus 2 - constraints associated with the manifested attributes of

decision makers

Identity issues: sense of self;

Psychological issues: impatience, commitment, and psychological

barriers

Aspirations failure perspective

What are Aspirations?

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Aspirations:

are goals or boundary-states sought after with respect to a relevant

domain of choice (future-oriented);

Aspirations and expectations – preferences vs. beliefs;

Aspirations are important for analysing and/or addressing

poverty:

Condition individual behaviour and well-being (motivators );

Are distributed unevenly within communities;

Are context-dependent and changing;

Aspirations and Poverty - A Conceptual Schema

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Inadequate incentives

for information and/or exploration

Poverty

diminishes/magnify

the significance of

some features of the

environment and dent

belief in ability to

change one's life

Limitted motivation

to allocate cognitive and other resources

to modify beliefs/perceptions

Beliefs and aspirations

maintained, behaviour unchnaged,

opprotunities unexploited/not

created

Step 1: Correlations

Step 2: Measurement

Step 3: Treatment

Step 4: Experiment

Step 5: Replications

Research program

Survey-based evidence

Poorer individuals seem to have lower aspirations;

Individuals in poorer communities have lower aspirations;

Women appear to have lower aspirations;

Individuals who belief they have significant control over their lives (internal

locus of control)

display higher aspirations,

send more of their children to school,

achieve better nutritional outcomes for their children, and

more likely to adopt modern farming practices;

Caveat:

Mostly panel data used, thus some claim to causal links;

But happy to consider them as correlations;

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Field Experiment - Specific Question

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Is it possible to alter poor individuals’ understanding of the

opportunities they face by actively trying to change their

aspirations using an experimental design in a real-world

setting?

Measure aspirations;

Introduce an exogenous shock to aspiration;

Estimate impact on aspirations, correlates/determinants, and

behaviour;

Experimental design: individual treatment

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64 villages. Random selection of 6 treatment HH, 6 placebo HH, 6

control HH. Head and spouse treated.

3 arms:

Treatment: ticket to view mini-documentaries about similar people who were

successful in small business or agriculture.

o No other intervention.

o 4 x 15 minute documentaries (2 men, 2 women) = 1 hour in Oromiffa

o Examples on CSAE Oxford YouTube channel

Placebo: local Ethiopian TV show in 15 minute segments.

Control: surveyed at their home.

3 rounds of data collection:

baseline (Sept-Dec 2010),

aspirations immediately after treatment,

follow-up six months later (Mar-May 2011).

On going experiment

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Measures of aspirations

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Four dimensions:

Annual income in cash

Assets: house, furniture, consumer goods, vehicles

Social status: do villagers ask advice

Level of education of oldest child

Aspirations vs. Expectations:

What is the level of ___ that you would like to achieve?

What is the level of ___ that you think you will reach within ten years?

Overall aspiration index:

𝐴𝑖 = 𝑘w𝑖𝑘 𝑎𝑖𝑘 − 𝜇𝑘𝜎𝑘

𝑎𝑖𝑘 = individual 𝑖’s aspiration response in dimension 𝑘.

𝑤𝑖𝑘 = weight individual 𝑖 assigned to dimension 𝑘.

𝜇𝑘 , 𝜎𝑘 = village sample mean and standard deviation for dimension 𝑘.

Specification

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𝐴𝑖 = 𝑘w𝑖𝑘 𝑎𝑖𝑘 − 𝜇𝑘𝜎𝑘

𝑎𝑖𝑘 = individual 𝑖’s aspiration response to dimension 𝑘.

𝑤𝑖𝑘 = weight individual 𝑖 assigned to dimension 𝑘.

𝜇𝑘 , 𝜎𝑘 = village sample mean and standard deviation for dimension 𝑘.

Results

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After screening (t=1)

Aspirations Expectations

Treated individual 0.13* 0.13* 0.12* 0.12** 0.12** 0.11**

0.07 0.07 0.06 0.06 0.05 0.05

Placebo individual 0 0 0 0.02 0.03 0.03

0.03 0.03 0.03 0.04 0.04 0.03

Village F.E. Yes Yes Yes Yes Yes Yes

Lagged outcome No Yes Yes No Yes Yes

Controls No No Yes No No Yes

Respondents 1959 1957 1957 1959 1954 1954

Small treatment effects on aspiration immediately (about 20% of SD).

No placebo effect;

Results

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After six months (t=2)

Aspirations Expectations

Treated individual 0.04* 0.04* 0.03* 0.06*** 0.06*** 0.05**

0.02 0.02 0.02 0.02 0.02 0.02

Placebo individual 0.03 0.02 0.03 0.02 0.02 0.03

0.02 0.02 0.02 0.02 0.02 0.02

Village F.E. Y es Yes Yes Yes Yes Yes

Lagged outcome No Yes Yes No Yes Yes

Controls No No Yes No No Yes

Respondents 2063 2058 2058 2062 2054 2054

Small effects on aspiration after 6 months (about 3-5% of SD);

No placebo effect;

Hypothesis that the treatment effect right after screening is the same as

the effect after six months – not rejected.

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Observations

• Watching documentaries about role models improves

aspirations compared to a control group and, in some cases,

compared to a placebo group.

– Driven by those with above-median aspirations at baseline.

– No changes in risk aversion and time preferences.

– Improvements in individuals’ sense that they control their lives (LoC,

causes of poverty).

• Small effects on ‘forward-looking behaviour’ - children’s

school enrolment, spending on schooling, hypothetical

demand for credit - that are robust to multiple testing.

– Effects on savings, credit are not robust to multiple testing.

• Suggestive evidence that peer effects may reinforce

individual effects.

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Replication - Pakistan

Pakistan’s July – August 2010 floods (which placed 1/5 of the

country under water) significantly lowered aspiration levels among

rural Pakistanis 1.5 years later (March – April 2012);

These effects are mediated in large part by the impact of floods on

individuals’ sense of control over their own life;

Floods make individuals more fatalistic (i.e. they have a more “external locus of

control”), which lowers their aspirations;

The negative impacts of the floods on aspirations were significantly

reduced—almost to zero—in villages that received the Citizen’s

Damage Compensation (Watan Card) Program;

Suggests a critically important role for social protection policies in

mitigating the negative aspirational impacts of such shocks;

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Policy Implications

Public service delivery – education, health, social protection

more effective;

less costly;

Psychological biases that development professionals may

have;

open discussion,

regular and rigorous diagnostics

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Thank you

Conceptual Schema