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Beyond Fatalism - An empirical exploration of self-efficacy and aspirations failure in Ethiopia

  • Tanguy Bernard
  • Stefan Dercon
  • Alemayehu Seyoum Taffesse

Fatalism is considered pervaisve, not leaste within many poor communities. In this paper, we explore whether 'fatalistic' beliefs have implications for the attitudes and behaviour of poor rural households towards investment in the future. We first explore the idea of fatalos, drawing inspiration from theories in psychology focusing on the role of locus of control and self-efficacy, and from the theoretical framework of aspiration failure as developed in recent economic literature. using survey data from rural Ethiopia, we find evidence of fatalistic beliefs among a substantial group of rural households, as well as indicators consistent withy a small aspiration gap and low self-efficay. We also find that such beliefs consistently correlate with lower demand for credit, in terms of loan size, repayment horzon and productive purposes.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2011-03.

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Date of creation: 2011
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Handle: RePEc:csa:wpaper:2011-03
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  1. Macours, Karen & Vakis, Renos, 2009. "Changing households'investments and aspirations through social interactions : evidence from a randomized transfer program," Policy Research Working Paper Series 5137, The World Bank.
  2. Dean Karlan & Jonathan Zinman, 2005. "Elasticities of Demand for Consumer Credit," Working Papers 926, Economic Growth Center, Yale University.
  3. Banerjee, Abhijit Vinayak & Benabou, Roland & Mookherjee, Dilip (ed.), 2006. "Understanding Poverty," OUP Catalogue, Oxford University Press, number 9780195305203, March.
  4. Hanming Fang & Glenn C. Loury, 2004. "Toward an Economic Theory of Dysfunctional Identity," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-146, Boston University - Department of Economics.
  5. Graham, Carol & Eggers, Andrew & Sukhtankar, Sandip, 2004. "Does happiness pay?: An exploration based on panel data from Russia," Journal of Economic Behavior & Organization, Elsevier, vol. 55(3), pages 319-342, November.
  6. Edward Miguel & Michael Kremer, 2003. "Networks, social learning, and technology adoption: The case of deworming drugs in kenya," Natural Field Experiments 00312, The Field Experiments Website.
  7. Dean Karlan & Nava Ashaf & Wesley Yin, 2004. "Tying odysseus to the mast: Evidence from a commitment savings product in the philippines," Natural Field Experiments 00206, The Field Experiments Website.
  8. Krishnan, P. & Krutikova, S., 2010. "Non-cognitive skill formation in poor neighbourhoods of urban India (updated 27-02-2012)," Cambridge Working Papers in Economics 1010, Faculty of Economics, University of Cambridge.
  9. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  10. Hoff, Karla & Pandey, Priyanka, 2004. "Belief systems and durable inequalities : an experimental investigation of Indian caste," Policy Research Working Paper Series 3351, The World Bank.
  11. Yamauchi, Futoshi, 2007. "Social learning, neighborhood effects, and investment in human capital: Evidence from Green-Revolution India," Journal of Development Economics, Elsevier, vol. 83(1), pages 37-62, May.
  12. Sourafel Girma & Abbi Kedir, 2005. "Heterogeneity in returns to schooling: Econometric evidence from Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 41(8), pages 1405-1416.
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