Violence and the formation of hopelessness: Evidence from internally displaced persons in Colombia

We explore the impact of violence on beliefs about socioeconomic mobility. For this purpose, we bring together data on the severity of the household-level experience of violence, symptoms of psychological trauma, and subjective probabilities of future positions in a ladder of life for a sample of internally displaced persons in Colombia. After controlling for current socioeconomic circumstances and asset losses, we find that the experience of more severe violence dampens the beliefs about socioeconomic mobility. The estimated impacts are large: a one standard deviation increase in the number of violent events experienced by the household raises the perceived probability of extreme poverty in the following year by 54 percent relative to the mean. In the long run, the expected likelihood of extreme poverty is almost three times higher for victims at the 4th quartile of the distribution of the severity of violence than for victims at the 1st quartile. Additional evidence suggests that psychological trauma explains this result, identifying a channel by which these hopeless beliefs can become self-confirming. Together, the results point to the existence of a behavioral poverty trap and highlight the importance of rethinking the strategies to promote the socioeconomic recovery of victims of violence.