Poverty and Aspirations Failure

Policymakers must intervene to raise aspirations and expectations to help people out of poverty and social exclusion. This intervention is vital to break the vicious cycle that perpetuates chronic poverty. Raising low aspirations must complement the delivery of aid and assistance on the ground.

Chronic poverty is a condition that requires an understanding of the multidimensional processes that makes people poor and keeps them poor. The Chronic Poverty Report (2008-2009) estimates that 320 to 443 million people will live trapped in chronic poverty: i.e., they will remain poor for much or all of their lives and their children are likely to inherit their poverty as well.

An influential literature on poverty traps argues that such persistent poverty prevails due to constraints that are external to the individual. Examples of such constraints are credit or insurance market imperfections, coordination problems, institutional or governmental failures, malnutrition, neighbourhood effects or even the family system.  

An alternative view is that living in poverty itself, impacts peoples’ expectations and aspirations. This in turn makes it more difficult for them to escape from poverty. Appadurai (2004, p. 59) notes that poor people may lack the capacity to aspire to "contest and alter the conditions of their own poverty." However, unlike with external constraints, it is not clear whether such internal constraints are the cause of poverty -- or its consequence. Is it that the poor exhibit the same biases as do people from other walks of life, except that in poverty these biases lead to worse outcomes?

In our paper, “Poverty and Aspirations Failure”, we have established a theoretical framework that models the feedback loop between initial disadvantage and aspirations, choices and achievement. We begin by modelling an important behavioural bias that individuals suffer from, in setting life goals or aspirations. In the ladder of individual aspirations, most people are typically able to visualize only one rung above at a time -- but not the entire pathway of how far they can travel.  

Individuals underestimate how their aspirations evolve over their lifetime as a consequence of their effort. Evidence suggests that the rich are not very different from the poor in this respect.  However, poverty imposes an additional constraint on the poor: They face much greater downside risks than the rich in their lives. Because of such risk, poverty exacerbates the adverse effects of the behavioural bias in setting aspirations, by affecting their effort choices, and hence makes them more susceptible to an aspirations failure.  

So, for example, take a poor farmer who is worried about whether she will get a good enough crop to feed her family.  If her child is under performing in school, she may wonder whether its worth expending more resources on getting him to catch up and doing better at school; making sure the family does not starve would seem more important.  But lower parental effort in this regard increases the odds of low performance by the kid; but worse, low performance feeds into lower aspiration for how well he can do in school, and diminishes his long term education achievement well below what he may be capable of.

Think of two individuals who have the same initial aspiration level, one rich and the other poor. At this given aspiration level, the poor person would optimally choose a lower effort level than the rich one, due to a higher downside risk. However, the feedback from effort to aspirations implies that the lower effort of the poor person will cause his aspiration level to diverge from that of the rich person.

We have begun investigating whether raising aspirations can help raise levels of achievement amongst the poor. In one case study in Kolkata, India, researchers examined the use of “dream building sessions” aimed at raising the aspirations of a socially excluded group - sex workers. A recently concluded pilot study has yielded promising results.  The next stage of the research will be a scaled up piece of fieldwork that will produce evidence of the impact of “dream building” on altering choices for example, increased condom usage and changing savings behaviour.

A second planned case study, Orchestras for Children and Young Students in Buenos Aires, will examine whether the aspirations of children from very deprived backgrounds are raised with their participation in classical music orchestras. The researchers will examine whether their regular participation has spill-overs in other dimensions such as educational performance.

The research will set the ground work to develop the techniques required to raise low aspirations. It is not enough to spend money to raise educational standards in schools: children must also aspire to attain those standards. So intervention is needed on both fronts.

References:
1.    Appadurai A. (2004) "The Capacity to Aspire," in V. Rao and M. Walton (eds.), Culture and Public Action, The International Bank for Reconstruction and Development, The World Bank, Washington, DC.
2.    Dalton, P.S., S.Ghosal and A. Mani (2011), “Poverty and Aspirations Failure”, CAGE Working Paper.