Aspirations and Poverty in Rural Ethiopia

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Aspirations and Poverty in Rural Ethiopia

Tanguy Bernard1, Stefan Dercon2, Kate Orkin3, Fanaye Tadesse1,

Alemayehu Seyoum Taffesse1, and Ibrahim Worku1

1International Food Policy Research Institute2 University of Oxford, 3 University of Cambridge

iiG Conference: Improving Institutions for Growth

20-21 March 2015

St Catherine’s College, University of Oxford

27/03/2015

Motivation and research agenda;

Aspirations

Aspiration and poverty – suggestive evidence

Field experiment – design and findings

Report on the direct effects on aspirations;

Summarize results related to beliefs, preferences, and future-oriented

behaviour

Outline

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Motivation - Initial

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Fatalism

Examples:

“We live only for today”;

“It is a life of no thought for tomorrow”;

“We have neither a dream nor an imagination”

Rahmato and Kidanu (1999)

General - lack of proactive and systematic effort to better one’s own

life;

Economic perspective – not making the ‘investments to better one's

life’ or exploit and/or create opportunities.

Evidence: underinvestment by the poor is common and can be a source

of persistence in poverty and inequality

Step 1: Correlations

Step 2: Measurement

Step 3: Treatment

Step 4: Experiment

Step 5: Replications

Research program

With parallel implementation as

demanded by circumstances

Aspirations – what, why?

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Aspirations:

are goals or boundary-states sought after with respect to a relevant

domain of choice (future-oriented);

Aspirations and expectations – preferences vs. beliefs;

Aspirations are important for analysing and/or addressing

poverty:

Condition individual behaviour and well-being (motivators );

Are distributed unevenly within communities – beliefs, experience,

personality;

Are context-dependent and changing;

Correlates and Selected Outcomes

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Improved

seed use

Fertilizer

use

Radio

ownership

Girls

school

ratio

School

ratio – all

school-age

children

LoC - Internal0.0064** 0.0060* 0.0095*** 0.0071*** 0.0050**

(0.003) (0.003) (0.002) (0.002) (0.002)

LoC - Chance-0.0015 -0.0144*** -0.0034* 0.0031 0.0016

-0.003 -0.004 (0.002) (0.003) (0.003)

LoC-Others-0.0035 -0.0044 -0.0040** -0.0097*** -0.0086***

-0.003 -0.003 (0.002) (0.003) (0.003)

Self-reported

wealth

0.0361*** 0.0647*** 0.0496*** 0.0375*** 0.0307***

Controls – sex, age, education; village clustered standard errors.

Suggestive Evidence - Wealth Aspiration I

Ethiopian Rural Households Survey (ERHS)

Spatial coverage: 15 Kebeles (villages);

Temporal coverage: 1993/94-2009 (7 rounds the last three roughly one every 5

years)

Wealth Aspirations

Round 7 Question: We would now like you to think of your own wealth.

Thinking of a scale from 1 (the lowest or worst level) to 10 (the highest or

best level):

Q39a. At what level do you believe you are currently?

Q39b. At what level would you like to be?

Estimation

Use ordered responses to Q39b as the dependent variable;

o ordered probit model (basic, generalized, semi-nonparametric);

Robust/Clustered standard errors

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Marginal Effects – All Rounds

dy/dx per one SD change (%)

Shock

Median income

growth of

neighbors

(round7-round6)

Median

income

growth (all

rounds)

Number of

rounds

respondent

was poor

Pr(Wealth Aspiration = 1) 1.92 -3.44 0.00 2.30

Pr(Wealth Aspiration = 2) 0.79 -3.44 0.00 0.88

Pr(Wealth Aspiration = 3) 1.36 0.00 -2.60 0.00

Pr(Wealth Aspiration = 4) -3.84 -6.88 5.19 -2.65

Pr(Wealth Aspiration = 5) -0.23 13.77 0.00 -0.71

Mean (SD) 2.4 (1.1) -18.3 (34.4) 3.3 (26.0) 2.8 (1.8)

Note: Figures in red are statistically significant at least at 10% level of significance. Controls

include: sex, age, marital status, education, participation in non-farm activities, Iddir

membership.

Comparable results when assets or self-reported wealth rank is used instead of

income, as well as when the analysis is restricted to rounds 6 and 7 only;

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Suggestive Evidence - Wealth Aspirations II

dy/dx per one SD change (%)

Self-reported

wealth

Median self-reported

wealth in the village

Log (Asset Aspiration)

Mean = 11.02, SD = 1.37

29.0 9.1

Mean (SD) 4.4 (1.1) 4.13 (0.35)

Note: Figures in red are statistically significant at least at 1% level of significance.

Controls include: sex, age, marital status, education, participation in non-farm activities,

Iddir membership.

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Insurance Data

Surveys of the Index Insurance Study 2011-2014;

Baseline and four follow-up household surveys of 1760 randomly

selected households.

Aspiration module added in the last round;

Observations Results

Poorer individuals have on average lower aspirations;

Results persist across specifications;

Panel data used, but happy to consider them as correlations;

Issues

Measurement – revealed vs. declared – develop an instrument

Identification – correlations vs. causal links (poverty–low

aspirations) – field experiment

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Specific Question

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Is it possible to alter poor individuals’ aspirations and link

changes thereof to behavior using an experimental design in a

real-world setting?

Measure aspirations;

Introduce an exogenous shock to aspiration;

Estimate impact on aspirations, correlates/determinants, and

behaviour;

Four dimensions

income, assets, education, social status

weights

Five questions;

What is the maximum (minimum) level of (dimension k) that one can have in

have in your current neighborhood?

What is the minimum level of (dimension k) that one can have in your current

current neighborhood?”

What is the level of (dimension k) that you have at present?”

What is the level of (dimension k) that you would like to achieve in your life?”

Measurement of Aspiration

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Experimental design: individual treatment

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64 villages. Random selection of 6 treatment HH, 6 placebo HH, 6

control HH. Head and spouse treated.

3 arms:

Treatment: ticket to view mini-documentaries about similar people who were

successful in agriculture or small business.

o No other intervention.

o 4 x 15 minute documentaries (2 men, 2 women) = 1 hour in Oromiffa

o Examples on CSAE Oxford YouTube channel

Placebo: local Ethiopian TV show in 15 minute segments.

Control: surveyed at their home.

3 rounds of data collection:

baseline (Sept-Dec 2010),

aspirations immediately after treatment,

follow-up six months later (Mar-May 2011).

On going experiment

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Measures of aspirations

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Four dimensions:

Annual income in cash

Assets: house, furniture, consumer goods, vehicles

Social status: do villagers ask advice

Level of education of oldest child

Aspirations vs. Expectations:

What is the level of ___ that you would like to achieve?

What is the level of ___ that you think you will reach within ten years?

Overall aspiration index:

𝐴𝑖 = 𝑘w𝑖𝑘 𝑎𝑖𝑘 − 𝜇𝑘𝜎𝑘

𝑎𝑖𝑘 = individual 𝑖’s aspiration response to dimension 𝑘.

𝑤𝑖𝑘 = weight individual 𝑖 assigned to dimension 𝑘.

𝜇𝑘 , 𝜎𝑘 = village sample mean and standard deviation for dimension 𝑘.

Specification

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𝐴𝑖 = 𝑘w𝑖𝑘 𝑎𝑖𝑘 − 𝜇𝑘𝜎𝑘

𝑎𝑖𝑘 = individual 𝑖’s aspiration response to dimension 𝑘.

𝑤𝑖𝑘 = weight individual 𝑖 assigned to dimension 𝑘.

𝜇𝑘 , 𝜎𝑘 = village sample mean and standard deviation for dimension 𝑘.

Results

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After screening (t=1)

Aspirations Expectations

Treated individual 0.13* 0.13* 0.12* 0.12** 0.12** 0.11**

0.07 0.07 0.06 0.06 0.05 0.05

Placebo individual 0 0 0 0.02 0.03 0.03

0.03 0.03 0.03 0.04 0.04 0.03

Village F.E. Yes Yes Yes Yes Yes Yes

Lagged outcome No Yes Yes No Yes Yes

Controls No No Yes No No Yes

Respondents 1959 1957 1957 1959 1954 1954

Small treatment effects on aspiration immediately (about 20% of SD).

No placebo effect;

Results

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After six months (t=2)

Aspirations Expectations

Treated individual 0.04* 0.04* 0.03* 0.06*** 0.06*** 0.05**

0.02 0.02 0.02 0.02 0.02 0.02

Placebo individual 0.03 0.02 0.03 0.02 0.02 0.03

0.02 0.02 0.02 0.02 0.02 0.02

Village F.E. Y es Yes Yes Yes Yes Yes

Lagged outcome No Yes Yes No Yes Yes

Controls No No Yes No No Yes

Respondents 2063 2058 2058 2062 2054 2054

Small effects on aspiration after 6 months (about 3-5% of SD);

No placebo effect;

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Observations

Watching documentaries about role models improves

aspirations compared to a control group and, in some cases,

compared to a placebo group.

Driven by those with above-median aspirations at baseline.

No changes in risk aversion and time preferences.

Improvements in individuals’ sense that they control their lives (LoC,

causes of poverty).

Small effects on ‘forward-looking behaviour’ - children’s

school enrolment, spending on schooling, hypothetical desire

for credit - that are robust to multiple testing.

Effects on savings, credit are not robust to multiple testing.

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Observations

Note:

The treatment is “weak“ – an aspirational intervention alone;

Effects on behaviour are small and diminishing – but can have lasting

effects (e.g. one additional year of schooling)

Repeat survey to be conducted soon

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Thank you