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Aspiring to a Better Future: Can a Simple Psychological Intervention Reduce Poverty?

Author

Listed:
  • Kate Orkin
  • Rob Garlick
  • Mahreen Mahmud
  • Richard Sedlmayr
  • Johannes Haushofer
  • Stefan Dercon

Abstract

How do aspirations influence investment decisions for people living in poverty? Does this change as peoples economic conditions improve? To answer these questions, we design a workshop teaching techniques to raise aspirations and plan to achieve them. We cross-randomise this with large unconditional cash transfers in a 415-village, 8,300-person, 1.5-year experiment in Kenya. The workshop substantially raises aspirations, investment, and living standards. But the workshop+cash produces similar effects to cash alone, potentially because cash raises aspirations. Thus, helping people living in poverty set higher aspirations can raise investment and living standards, but improving economic conditions can activate the same process.

Suggested Citation

  • Kate Orkin & Rob Garlick & Mahreen Mahmud & Richard Sedlmayr & Johannes Haushofer & Stefan Dercon, 2023. "Aspiring to a Better Future: Can a Simple Psychological Intervention Reduce Poverty?," NBER Working Papers 31735, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31735
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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