Aspirations and Poverty in Rural Ethiopia
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Transcript of Aspirations and Poverty in Rural Ethiopia
27/03/2015 1
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