Formation of Aspirations –An Empirical Analysis

1. 1
Formation of Aspirations –
An Empirical Analysis
Tanguy Bernard1
, Stefan Dercon2
, Fanaye Tadesse1
,
Alemayehu Seyoum Taffesse1
, and Ibrahim Worku1
1
International Food Policy Research Institute
2
University of Oxford
Presentation on RISE Research Day
March 6, 2015
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2. Summary
 Poorer individuals, on average, have lower aspirations;
 Individuals in poorer communities have lower aspirations;
 Women appear to have lower aspirations;
 Individuals who believe 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;
 Policy implications - design programs for poverty reduction, social
protection
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3. 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’.
Evidence: underinvestment by the poor is common and can be a
source of persistence in poverty and inequality

4. 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;

5. Wealth Aspiration - Data
Ethiopian Rural Households Survey (ERHS)
Spatial coverage: 15 Kebeles (villages);
Temporal coverage: 1993/94-2009 (7 rounds the last three roughly one every 5
years)
Wealth Aspirations
Round 7 Question: We would now like you to think of your own wealth.
Thinking of a scale from 1 (the lowest or worst level) to 10 (the highest or
best level):
Q39a. At what level do you believe you are currently?
Q39b. At what level would you like to be?
Estimation
Use ordered responses to Q39b as the dependent variable;
o ordered probit model (basic, generalized, semi-nonparametric);
Robust/Clustered standard errors
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6. Marginal (Partial) Effects – All Rounds
dy/dx per one SD change (%)
Shock
Median income
growth of
neighbors
(round7-round6)
Median
income
growth (all
rounds)
Number of
rounds
respondent
was poor
Pr(Wealth Aspiration = 1) 1.92 -3.44 0.00 2.30
Pr(Wealth Aspiration = 2) 0.79 -3.44 0.00 0.88
Pr(Wealth Aspiration = 3) 1.36 0.00 -2.60 0.00
Pr(Wealth Aspiration = 4) -3.84 -6.88 5.19 -2.65
Pr(Wealth Aspiration = 5) -0.23 13.77 0.00 -0.71
Mean (SD) 2.4 (1.1) -18.3 (34.4) 3.3 (26.0) 2.8 (1.8)
Note: Figures in red are statistically significant at least at 10% level of significance.
Controls include: sex, age, marital status, education, participation in non-farm activities,
Iddir membership.
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7. Marginal (Partial) Effects – Insurance Data
dy/dx per one SD change (%)
Self-reported
wealth
Median self-reported
wealth in the village
Log (Asset Aspiration)
Mean = 11.02, SD = 1.37
29.0 9.1
Mean (SD) 4.4 (1.1) 4.13 (0.35)
Note: Figures in red are statistically significant at least at 1% level of significance.
Controls include: sex, age, marital status, education, participation in non-farm activities,
Iddir membership.
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 Surveys of the Index Insurance Study 2011-2014;
 Baseline and four follow-up household surveys of 1760 randomly
selected households.
 Aspiration module;

8. Internal Locus of Control – FTF
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.6.7.8.9
0 2 4 6 8
selfreported_wealth
Pr(internal_loc) 95% CI
Fitted values

9. Locus of Control and Selected Outcomes
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Improved
seed use
Fertilizer
use
Radio
ownership
Girls
school
ratio
School
ratio – all
school-
age
children
LoC - Internal
0.0064** 0.0060* 0.0095*** 0.0071*** 0.0050**
(0.003) (0.003) (0.002) (0.002) (0.002)
LoC - Chance
-0.0015 -0.0144*** -0.0034* 0.0031 0.0016
-0.003 -0.004 (0.002) (0.003) (0.003)
LoC-Others
-0.0035 -0.0044 -0.0040** -0.0097*** -0.0086***
-0.003 -0.003 (0.002) (0.003) (0.003)
Self-reported
wealth
0.0361*** 0.0647*** 0.0496*** 0.0375*** 0.0307***
Controls – sex, age, education; village clustered standard errors.

10. Observations
 Results
 Poorer individuals have on average lower aspirations;
 Panel data used, but happy to consider them as correlations;
 Results persist across models;
 Implications
 Helping create opportunities may not be sufficient
 Devising mechanisms that encourage the poor to create and/or
exploit opportunities can help (nudges - role models,
organizations)
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11. Thank you
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