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Targeting, beliefs in own potential and subsequent investments: Theory and evidence from a framed field experiment

Author

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  • van Dongen, Elisa
  • Lensink, Robert
  • Treurniet, Mark

Abstract

While increased pressure on development finance budgets may require to reduce spending on anti-poverty transfers, new technical possibilities allow for more precise targeting. Yet, how targeting affects development outcomes remains an open question. We introduce a behavioral mechanism: if transfers are targeted to low-income individuals, recipients may interpret this as a signal of lacking earning potential, and consequently reduce investments. Using a framed field experiment in rural Uganda, we study how the targeting of anti-poverty transfers – compared to universal provision – affects subsequent investment behavior. Consistent with our hypotheses, we find that targeted recipients reduce their investments, which may reduce their earnings.

Suggested Citation

  • van Dongen, Elisa & Lensink, Robert & Treurniet, Mark, 2026. "Targeting, beliefs in own potential and subsequent investments: Theory and evidence from a framed field experiment," Journal of Behavioral and Experimental Finance, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:beexfi:v:49:y:2026:i:c:s2214635026000122
    DOI: 10.1016/j.jbef.2026.101150
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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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