Poverty and Aspirations Failure

P.S. Dalton, S. Ghosal, A. Mani

Research output: Working paperDiscussion paperOther research output

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Abstract

We develop a theoretical framework to study the psychology of poverty and 'aspirations failure'. In our framework, the rich and the poor share the same preferences - and also a behavioral bias in setting aspirations. Greater downside risks imposed by poverty exacerbates the effects of this behavioral bias: the poor are more susceptible to both an aspirations failure and pessimism about the likelihood of achieving success. Poverty limits the set of people whose life experiences the poor consider relevant for forming their own beliefs and aspirations. Mitigating behavioral poverty traps require policies which go beyond reducing material deprivation.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages35
Volume2011-124
Publication statusPublished - 2011

Publication series

NameCentER Discussion Paper
Volume2011-124

Fingerprint

Aspiration
Poverty
Behavioral biases
Theoretical framework
Material deprivation
Psychology
Downside risk
Pessimism
Poverty trap

Keywords

  • Reference-dependent Preferences
  • Aspirations
  • Persistent Poverty
  • Locus of control
  • Simillarity and Belief Formation

Cite this

Dalton, P. S., Ghosal, S., & Mani, A. (2011). Poverty and Aspirations Failure. (CentER Discussion Paper; Vol. 2011-124). Tilburg: Economics.
Dalton, P.S. ; Ghosal, S. ; Mani, A. / Poverty and Aspirations Failure. Tilburg : Economics, 2011. (CentER Discussion Paper).
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Dalton, PS, Ghosal, S & Mani, A 2011 'Poverty and Aspirations Failure' CentER Discussion Paper, vol. 2011-124, Economics, Tilburg.

Poverty and Aspirations Failure. / Dalton, P.S.; Ghosal, S.; Mani, A.

Tilburg : Economics, 2011. (CentER Discussion Paper; Vol. 2011-124).

Research output: Working paperDiscussion paperOther research output

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T1 - Poverty and Aspirations Failure

AU - Dalton, P.S.

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AU - Mani, A.

N1 - Pagination: 35

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N2 - We develop a theoretical framework to study the psychology of poverty and 'aspirations failure'. In our framework, the rich and the poor share the same preferences - and also a behavioral bias in setting aspirations. Greater downside risks imposed by poverty exacerbates the effects of this behavioral bias: the poor are more susceptible to both an aspirations failure and pessimism about the likelihood of achieving success. Poverty limits the set of people whose life experiences the poor consider relevant for forming their own beliefs and aspirations. Mitigating behavioral poverty traps require policies which go beyond reducing material deprivation.

AB - We develop a theoretical framework to study the psychology of poverty and 'aspirations failure'. In our framework, the rich and the poor share the same preferences - and also a behavioral bias in setting aspirations. Greater downside risks imposed by poverty exacerbates the effects of this behavioral bias: the poor are more susceptible to both an aspirations failure and pessimism about the likelihood of achieving success. Poverty limits the set of people whose life experiences the poor consider relevant for forming their own beliefs and aspirations. Mitigating behavioral poverty traps require policies which go beyond reducing material deprivation.

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KW - Aspirations

KW - Persistent Poverty

KW - Locus of control

KW - Simillarity and Belief Formation

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VL - 2011-124

T3 - CentER Discussion Paper

BT - Poverty and Aspirations Failure

PB - Economics

CY - Tilburg

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Dalton PS, Ghosal S, Mani A. Poverty and Aspirations Failure. Tilburg: Economics. 2011. (CentER Discussion Paper).