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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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Web page: http://center.uvt.nl

Related research

Keywords: Reference-dependent Preferences; Aspirations; Persistent Poverty; Locus of control; Simillarity and Belief Formation;

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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 107, Competitive Advantage in the Global Economy (CAGE).
  3. Patricio S. Dalton & Sayantan Ghosal, 2011. "Behavioral Decisions and Policy," CESifo Economic Studies, CESifo, vol. 57(4), pages 560-580, December.
  4. Dalton, Patricio & Ghosal, Sayantan, 2008. "Behavioural Decisions and Welfare," The Warwick Economics Research Paper Series (TWERPS) 834, University of Warwick, Department of Economics.
  5. Solava Ibrahim, 2011. "Poverty, aspirations and wellbeing: afraid to aspire and unable to reach a better life – voices from Egypt," Brooks World Poverty Institute Working Paper Series 14111, BWPI, The University of Manchester.
  6. Laura Camfield & Awae Masae & J. McGregor & Buapun Promphaking, 2013. "Cultures of Aspiration and Poverty? Aspirational Inequalities in Northeast and Southern Thailand," Social Indicators Research, Springer, vol. 114(3), pages 1049-1072, December.
  7. Garance Genicot & Debraj Ray, 2014. "Aspirations and Inequality," NBER Working Papers 19976, National Bureau of Economic Research, Inc.

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