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Aspirations and Financial Decisions: Experimental Evidence from the Philippines

Author

Listed:
  • David McKenzie
  • Aakash Mohpal
  • Dean Yang

Abstract

A randomized experiment among poor entrepreneurs tested the impact of exogenously inducing higher financial aspirations. In theory, raising aspirations could have positive effects by inducing higher effort, but could also reduce effort if unmet aspirations lead to frustration. Treatment resulted in more ambitious savings goals, but nearly all individuals fell far short of reaching these goals. Two years later, treated individuals had not saved more, and actually had lower borrowing and business investments. Treatment also reduced belief in the amount of control over one’s life. Setting aspirations too high can lead to frustration, leading individuals to reduce their economic investments.

Suggested Citation

  • David McKenzie & Aakash Mohpal & Dean Yang, 2021. "Aspirations and Financial Decisions: Experimental Evidence from the Philippines," NBER Working Papers 28607, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28607
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    Cited by:

    1. Tim Kaiser & Lukas Menkhoff & Luis Oberrauch, 2022. "Is Patience Malleable via Educational Intervention? Evidence from Field Experiments," CESifo Working Paper Series 10080, CESifo.
    2. Mesplé-Somps, Sandrine & Nilsson, Björn, 2023. "Role models, aspirations and desire to migrate," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 819-839.
    3. Diego Javier Ubfal, 2023. "What Works in Supporting Women-led Businesses?," World Bank Publications - Reports 38564, The World Bank Group.
    4. Villacis, Alexis H. & Bloem, Jeffrey R. & Mishra, Ashok K., 2023. "Aspirations, risk preferences, and investments in agricultural technologies," Food Policy, Elsevier, vol. 120(C).
    5. Patrick Opoku Asuming & Hyuncheol Bryant Kim & Armand Sim, 2024. "Selection and behavioral responses of health insurance subsidies in the long run: Evidence from a field experiment in Ghana," Health Economics, John Wiley & Sons, Ltd., vol. 33(5), pages 992-1032, May.
    6. Lim, Sung Soo & Bone, Matthew, 2022. "Optimism, debt accumulation, and business growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    7. Nocito, Samuel & Venturini, Alessandra, 2025. "Inter-institutional cooperation and migrants' financial education: An Italian case study," Evaluation and Program Planning, Elsevier, vol. 110(C).
    8. Tabe-Ojong, Martin Paul Jr. & Heckelei, Thomas & Baylis, Kathy & Rasch, Sebastian, 2023. "Cooperative membership and exposure to role models: Implications for income and asset aspirations," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    9. Martin Paul Jr. Tabe‐Ojong & Thomas Heckelei & Sebastian Rasch, 2023. "Aspirations and investments in livestock: Evidence of aspiration failure in Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 54(5), pages 674-696, September.
    10. M Lang & J Seither, 2022. "The Economics of Women s Entrepreneurship: Evidence from Building Skills in Uganda," Documentos de Trabajo 20563, Universidad del Rosario.
    11. Tabe-Ojong, Jr., Martin Paul & Godana, Guyo, 2022. "Are Agro-clusters Pro-Poor? Evidence from Ethiopia," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322432, Agricultural and Applied Economics Association.
    12. D’Exelle, Ben & Munro, Alistair & Verschoor, Arjan, 2024. "Agricultural investment behaviour and contingency: Experimental evidence from Uganda," World Development, Elsevier, vol. 173(C).
    13. Ding Wang & Peng Guo & Ning Guo, 2024. "The evolution of research and development cooperation in dynamically interorganizational project networks: Effects of reference‐point‐based expectations," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(2), pages 590-607, March.
    14. Juan Carlos Urueña-Mejía & Luis H. Gutierrez & Paul Rodríguez-Lesmes, 2023. "Financial inclusion and business practices of microbusiness in Colombia," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 465-494, June.
    15. Tabe-Ojong, Martin Paul Jr., 2022. "Ecological shocks and non-cognitive skills: Evidence from Kenya," Ecological Economics, Elsevier, vol. 194(C).
    16. Alexis H. Villacis & Selina Bruns & Martin Paul Jr Tabe‐Ojong & David L. Ortega & Ashok K. Mishra, 2025. "Gender dynamics and aspirational disparities in agriculture," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 47(1), pages 176-198, March.
    17. Muller, Noël & Fruttero,Anna & Calvo-Gonzalez,Oscar & De Hoop,Jacobus Joost, 2024. "Policies for Aspirations and Opportunities," Policy Research Working Paper Series 192482, The World Bank.
    18. Cettolin, Elena & Cole, Kym & Dalton, Patricio, 2024. "Improving workers’ performance in small firms : A randomized experiment on goal setting in Ghana," Other publications TiSEM d9fa5424-4f53-4e02-8cb2-c, Tilburg University, School of Economics and Management.
    19. Cettolin, Elena & Cole, Kym & Dalton, Patricio, 2022. "Improving Workers’ Performance in Small Firms : A Randomized Experiment on Goal Setting in Ghana," Other publications TiSEM d0f494f0-87ed-4ef2-8472-6, Tilburg University, School of Economics and Management.
    20. Tabe-Ojong, Martin Paul Jr. & Nshakira-Rukundo, Emmanuel, 2021. "Religiosity and parental educational aspirations for children in Kenya," World Development Perspectives, Elsevier, vol. 23(C).
    21. Azevedo, Viviane & Lafortune, Jeanne & Olarte, Liliana & Tessada, José, 2024. "Personalizing or reminding? How to better incentivize savings among underbanked individuals," Journal of Economic Behavior & Organization, Elsevier, vol. 222(C), pages 25-63.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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