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Poverty and Aspirations Failure

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

    (Tilburg University, Center for Economic Research)

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.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-124.

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Date of creation: 2011
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Handle: RePEc:dgr:kubcen:2011124

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  1. George Loewenstein, Ted O'Donoghue and Matthew Rabin., 2000. "Projection Bias in Predicting Future Utility," Economics Working Papers E00-284, University of California at Berkeley.
  2. Dalton, Patricio; Ghosal, Sayantan, 2010. "Behavioural Decisions and Welfare," CAGE Online Working Paper Series 06, Competitive Advantage in the Global Economy (CAGE).
  3. Alois Stutzer, . "The Role of Income Aspirations in Individual Happiness," IEW - Working Papers 124, Institute for Empirical Research in Economics - University of Zurich.
  4. Abhijit Banerjee & Sendhil Mullainathan, 2010. "The Shape of Temptation: Implications for the Economic Lives of the Poor," NBER Working Papers 15973, National Bureau of Economic Research, Inc.
  5. Robert Jensen & Emily Oster, 2007. "The Power of TV: Cable Television and Women's Status in India," NBER Working Papers 13305, National Bureau of Economic Research, Inc.
  6. Chong, Alberto & Duryea, Suzanne & La Ferrara, Eliana, 2008. "Soap Operas and Fertility: Evidence from Brazil," CEPR Discussion Papers 6785, C.E.P.R. Discussion Papers.
  7. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 515-548, May.
  8. Akresh, Richard & Bagby, Emilie & de Walque, Damien & Kazianga, Harounan, 2010. "Child Ability and Household Human Capital Investment Decisions in Burkina Faso," IZA Discussion Papers 5326, Institute for the Study of Labor (IZA).
  9. Jonathan Shalev, 1997. "Loss Aversion Equilibrium," Game Theory and Information 9703001, EconWPA, revised 11 Mar 1997.
  10. Biewen, Martin, 2003. "Who Are the Chronic Poor? Evidence on the Extent and the Composition of Chronic Poverty in Germany," IZA Discussion Papers 779, Institute for the Study of Labor (IZA).
  11. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  12. Kim-Sau Chung, 2000. "Role Models and Arguments for Affirmative Action," American Economic Review, American Economic Association, vol. 90(3), pages 640-648, June.
  13. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521003117.
  14. Karlin, Samuel & Rinott, Yosef, 1980. "Classes of orderings of measures and related correlation inequalities. I. Multivariate totally positive distributions," Journal of Multivariate Analysis, Elsevier, vol. 10(4), pages 467-498, December.
  15. Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1133-1165, November.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Poverty and Aspirations Failure
    by maximorossi in NEP-LTV blog on 2011-12-21 15:57:37
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Cited by:
  1. Marcus Böhme, 2012. "Migration and Education Aspirations - Another Channel of Brain Gain?," Kiel Working Papers 1811, Kiel Institute for the World Economy.
  2. Ghosal, Sayantan & Dalton, Patricio, 2013. "Characterizing Behavioral Decisions with Choice Data," CAGE Online Working Paper Series 106, Competitive Advantage in the Global Economy (CAGE).
  3. Dalton, P.S. & Ghosal, S., 2010. "Behavioral Decisions and Welfare (Replaces CentER DP 2010-22)," Discussion Paper 2010-143, Tilburg University, Center for Economic Research.

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