Poverty and Aspirations Failure

We develop a theoretical framework to study the psychology of poverty and 'aspirations failure', defined as the failure to aspire to one's own potential. In our framework, rich and the poor persons share the same preferences and same behavioural bias in setting aspirations. We show th...

Full description

Saved in:
Bibliographic Details
Published in:The Economic journal (London) 2016-02, Vol.126 (590), p.165-188
Main Authors: Dalton, Patricio S., Ghosal, Sayantan, Mani, Anandi
Format: Article
Language:English
Subjects:
Behavioral economics
Bias
Failure
Poverty
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We develop a theoretical framework to study the psychology of poverty and 'aspirations failure', defined as the failure to aspire to one's own potential. In our framework, rich and the poor persons share the same preferences and same behavioural bias in setting aspirations. We show that poverty can exacerbate the effects of this behavioural bias leading to aspirations failure and hence, a behavioural poverty trap. Aspirations failure is a consequence of poverty, rather than a cause. We specify the conditions under which raising aspirations alone is sufficient to help escape from a poverty trap, even without relaxing material constraints.
ISSN:0013-0133
1468-0297
DOI:10.1111/ecoj.12210