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The Future in Mind: Aspirations and Forward-Looking Behaviour in Rural

EthiopiaTanguy Bernard (LAREFI/IFPRI)

Stefan Dercon (Oxford/DFID)

Kate Orkin (Cambridge)

Alemayehu Seyoum Taffesse (IFPRI)

July 17, 2014

The 19th Annual Conference of the Africa Region Chapter of the Econometric Society

Ethiopian Economic Association (EEA) Multi-purpose Building, EEA

Do people’s aspirations – an aspect of their mental models concerning their opportunities and whether and how they can achieve them – affect whether they invest?

Randomly assign Ethiopian farmers to receive a ‘vicarious experience’ of the lives of four role models. Treatment = one hour of documentaries. No other intervention.

Key findings: Improvements in aspirations after screening and after six

months. Changes in related psychosocial concepts, but not risk

aversion or time preferences. Small improvements in savings, credit, demand for credit,

children’s school enrolment and spending on schooling 6 months after screening.

,

Summary

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Motivation Aspirations Field experiment – design and findings

Outline

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Motivation – why do poor people underinvest?

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Conceptual – ‘opportunities’

Focus 1 - ‘external circumstances’ and ‘opportunities’.

Low returns to investments; Unexploited opportunities due to lack of information or

knowledge; Social constraints;

Focus 2 - constraints associated with the manifested attributes of decision makers

Identity issues: sense of self; Psychological issues: impatience, commitment, and psychological

barriers

Aspirations failure perspective

What are Aspirations?

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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 ) Aspirations are context-dependent and changing Are distributed unevenly within communities.

Specific Question: Is it possible to alter poor people’s understanding of the opportunities they face by actively trying to change their aspirations using an experimental design in a real-world setting?

Specific Question

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Is it possible to alter poor individuals’ understanding of

the opportunities they face by actively trying to change

their aspirations using an experimental design in a

real-world setting?

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 small business or agriculture.o No other intervention.o 4 x 15 minute documentaries (2 men, 2 women) = 1 hour in

Oromiffao 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=∑

𝑘

w 𝑖𝑘(𝑎𝑖

𝑘−𝜇𝑘

𝜎𝑘)

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

𝑘=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 effects on aspiration immediately.

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

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Elements of the Aspirations Perspective

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. Y es Y es Y es Y es Y es Y es

Lagged outcome No Y es Y es No Y es Y es

Controls No No Y es No No Y es

Respondents 1959 1957 1957 1959 1954 1954

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 Y es Y es Y es Y es Y es

Lagged outcome No Y es Y es No Y es Y es

Respondents 2063 2058 2058 2062 2054 2054

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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 or time preferences.

– Also improvements in individuals’ sense that they control their lives.

• 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 aren’t robust to multiple testing.

• Suggestive evidence that peer effects may reinforce individual effects.

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Thank you

Conceptual Schema

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Surveyed : Treatment, 6 households (12 individuals) in every villagePlacebo, 6 households (12 individuals) in every villageControl, 6 households (12 individuals) in every village

Non-Surveyed : Treatment, 18 households (36 individuals)/ intense treatment villagePlacebo, 18 households (36 individuals)/ intense placebo village

Treatment village Placebo village

16 Screening sites, 4 villages/screening site (2 Intense Treatment, 2 Intense Placebo),

36 households/village (18 households surveyed, 18 households not surveyed)

Field Experiment – Design

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Field Experiment – Baseline Correlates of Aspirations

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  Income aspiration

Wealth aspiration

Education aspiration

Social status aspiration

Aspiration index

Age -0.000 0.001 0.002 0.006 0.003

  (0.000) (0.002) (0.003) (0.003)** (0.001)**

Age² 0.000 -0.000 -0.000* -0.000* -0.000

  (0.000) (0.000) (0.000) (0.000) (0.000)***

Gender (Male=1) 0.008 0.062 0.258 0.096 0.104

(0.002)*** (0.036)* (0.051)*** (0.049)** (0.021)***

Education (Read/write=1) -0.000 0.068 0.333 0.312 0.152

(0.002) (0.070) (0.051)*** (0.073)*** (0.027)***

R2 0.03 0.01 0.08 0.04 0.07

N 1,964 1,967 1,932 1,957 1,865

* p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects included but not reported; Robust standard errors in parentheses

Balance

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Sample balanced on gender, literacy, age and most outcomes

* p<0.1; ** p<0.05; *** p<0.01

  AllTreatment

(T)Placebo

(P)Control

(C)

% compliance by treatment status 95 93.8 96.2 100

 

Education (Read/write=

1)

Gender (% male)

Age (completed years)

Baseline Standarized ---- Aspiration

Income WealthChildren's Education

Social Status

Aggregate

Difference: T-C, p-value

0.02 0.32 0 0.84 0.15 0.86 0.1 0.14 0.03 0.35 0.05 0.43 0.09 0.08* 0.04 0.12

Difference: P-C, p-value

0.02 0.32 0 0.93 0.05 0.94 0 0.89 0.05 0.15 0.01 0.83 0.04 0.55 0.01 0.5

Field Experiment - Compliance and Potency of Treatment

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 Treatment(standard

error)

Placebo(standard

error)

Difference(p-value)

Liked a lot what I saw?0.95 0.73 0.22

(0.02) (0.01) (0.00)***

Discussed it a lot with my neighbours0.87 0.71 0.15

(0.01) (0.02) (0.00)***

Discussed it at least once with neighbours over the past two weeks

0.32 0.21 0.11

(0.02) (0.02) (0.00)***

Content generated a lot of discussion within community

0.92 0.72 0.20

(0.01) (0.02) (0.00)***

Assessment of Documentaries and Placebo

* p<0.1; ** p<0.05; *** p<0.01

Field Experiment - Compliance and Potency of Treatment

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How does his/her present condition fares compared to yours today?

He/she is worse off

We’re about the same

He/she is better off

How did his/her initial condition fared compared

to yours five years ago?

He/she was worse off 9.35 1.40 40.19

We were about the same 4.83 2.49 12.15

He/she was better off 6.70 1.71 21.18

Table 5 – Relevance of documentaries

Cell proportions are reported. The totals of all cells add up to 100. N=642

Impact on Aspirations - Estimation strategy

•  

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Treatment and Placebo Effects on Aspirations

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  (1) (2) (3) (4)

Treatment0.027   0.026  

(0.018)   (0.018)  

Placebo  0.016   0.015  (0.018)   (0.018)

# peers w/treatment0.026     0.021

(0.010)***     (0.009)**

# peers w/placebo  0.001 -0.022  

  (0.010) (0.012)*  

Baseline aspiration0.132 0.157 0.132 0.157

(0.062)** (0.050)*** (0.062)** (0.050)***

Constant 0.053 0.038 0.095 0.018

(0.035) (0.036) (0.037)*** (0.037)R2 0.06 0.07 0.06 0.08N 1,210 1,258 1,210 1,258

* p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

Treatment and Placebo Effects on Expectations

12/04/2023 23* p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

  (1) (2) (3) (4)

Treatment0.051   0.049  

(0.023)**   (0.023)*  

Placebo  0.021   0.018

  (0.021)   (0.021)

# peers w/treatment0.024     0.032

(0.010)**     (0.010)***

# peers w/placebo  0.015 0.007  

  (0.011) (0.014)  

Baseline expectations0.401 0.074 0.402 0.075

(0.056)*** (0.032)** (0.057)*** (0.032)**

Constant-0.047 -0.070 -0.028 -0.093

(0.046) (0.048) (0.048) (0.047)

R2 0.16 0.06 0.16 0.06

N 1,093 1,141 1,093 1,141

Treatment and Placebo Effects on Future-Oriented Behaviour

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  (1) (2) (3) (4)

Treatment-3.33   -3.83  

(12.61) (12.67)

Placebo-8.46 -8.85

(16.91) (16.865)

# peers w/treatment18.48 24.91

(7.97)** (10.6)**

# peers w/placebo-9.63 -9.47

(8.49) (6.73)

Baseline time allocation - Work

0.69 0.61 0.70 0.60

(0.02)*** (0.03)*** (0.02)*** (0.03)***

Constant138.1 167.7 156.0 141.7

(79.4)* (81.8)** (87.2)* (74.9)*

R2 0.3 0.18 0.3 0.18

N 1,280 1,317 1,280 1,317

Treatment effects on time allocation - work

Treatment and Placebo Effects on Future-Oriented Behaviour

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  (1) (2) (3) (4)

Treatment19.97   19.84  

(12.93) (13.04)

Placebo26.39 26.83

(12.79)** (13.01)**

# peers w/treatment-0.74 -10.87

(6.60) (6.28)*

# peers w/placebo1.79 3.35

(6.52) (5.71)

Baseline time allocation - Work

0.31 0.31 0.31 0.31

(0.03)*** (0.03)*** (0.03)*** (0.03)***

Constant522.6 549.2 519.8 560.2

(34.2)*** (33.3)*** (34.9)*** (33.8)***

R2 0.07 0.07 0.07 0.07

N 1,284 1,322 1,284 1,322

Treatment effects on time allocation - leisure

Treatment and Placebo Effects on Future-Oriented Behaviour

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  Savings Savings Deposits Deposits Withdrawals Withdrawals

  (1) (2) (3) (4) (5) (6)

Treatment186.9   63.5   33.7  

(106.4)*   (22.3)***   (17.2)*  

Placebo  126.1   17.9   4.6

  (95.1)   (20.6)   (9.3)

# peers with treatment34.3   -37.1   -5.4  

(85.9)   (11.9)***   (6.7)  

# peers with placebo  -28.2   -7.0   7.7

  (46.9)   (10.5)   (6.2)

Baseline savings0.741 0.658 -0.011 0.137 0.004 0.016

(0.578) (0.513) (0.011) (0.198) (0.017) (0.019)

Constant-105.3 -24.9 80.9 24.1 55.2 32.7

(314.9) (271.4) (47.9)* (21.8) (108.1) (16.4)**

R2 0.16 0.29 0.05 0.04 0.03 0.02

N 1,258 1,288 1,258 1,288 1,258 1,288

* p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects and controls for age, age², gender and education not reported; Robust standard errors in parenthesis

Table 10 – Treatment effects on savings behaviour

Treatment and Placebo Effects on Future-Oriented Behaviour

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Table A1 - Direct and indirect treatment effect on Locus of Control  LOC

othersLOC others LOC internal LOC

internalLOC chance LOC

chance

Treatment-0.027   0.083   -0.030  

(0.051)   (0.038)**   (0.044)  

Placebo 

  -0.015   -0.027   -0.028

  (0.050)   (0.039)   (0.043)

# peers w/treatment-0.056   -0.016   -0.059  

(0.028)**   (0.020)   (0.023)**  

# peers w/placebo  -0.002   -0.018   0.023

  (0.028)   (0.023)   (0.025)

Baseline LOC0.196 0.212 0.089 0.098 0.166 0.144

(0.031)*** (0.030)*** (0.030)*** (0.030)*** (0.027)*** (0.025)***

Constant1.720 1.736 2.726 2.684 1.900 1.911

(0.120)*** (0.127)*** (0.124)*** (0.123)*** (0.105)*** (0.104)***

R2 0.05 0.06 0.03 0.02 0.05 0.05

N 1,341 1,372 1,342 1,373 1,341 1,374

* p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

Treatment and Placebo Effects on Future-Oriented Behaviour

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Table A2 - Direct and indirect treatment effect on Perception of Poverty

* p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

  Poverty due to Fate Poverty Structural Poverty Individual

Treatment-0.108   0.033   0.088  

(0.048)**   (0.038)   (0.042)**  

Placebo  -0.005   0.058   0.072  (0.048)   (0.037)   (0.042)*

# peers w/treatment

-0.048   -0.046   -0.011  

(0.027)*   (0.021)**   (0.024)  

# peers w/placebo

  0.008   -0.012   -0.005  (0.029)   (0.023)   (0.025)

Baseline percept poverty

0.060 0.028 0.111 0.052 0.058 0.083

(0.031)* (0.031) (0.033)*** (0.030) (0.032)* (0.030)***

Constant2.397 2.506 2.465 2.723 2.907 2.869

(0.116)*** (0.120)*** (0.120)*** (0.114)*** (0.124)*** (0.119)***R2 0.02 0.02 0.02 0.03 0.03 0.03N 1,339 1,368 1,337 1,368 1,339 1,370

Observations

"Weak" treatment, but:

Documentaries affected aspirations, expectations, time allocation, savings behaviour, and perceptions more than the placebo even 6 months after treatment;

Direct and, even more visible, indirect (group) effects are detected – more of an aspiration window story rather than a role model one;

It is not obvious why some effects are direct (savings) while others are indirect (time allocation);

Further analysis; Expanding coverage – Malawi, Pakistan via IFPRI;

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