Open AccessPoverty and Aspirations Failure
Author(s) -
Dalton Patricio S.,
Ghosal Sayantan,
Mani Anandi
Publication year - 2016
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/ecoj.12210
Subject(s) - poverty , poverty trap , economics , trap (plumbing) , poor people , raising (metalworking) , culture of poverty , development economics , public economics , basic needs , economic growth , geography , mathematics , geometry , meteorology
We develop a theoretical framework to study the psychology of poverty and ‘aspirations failure’, defined as the failure to aspire to one's own potential. In our framework, rich and the poor persons share the same preferences and same behavioural bias in setting aspirations. We show that poverty can exacerbate the effects of this behavioural bias leading to aspirations failure and hence, a behavioural poverty trap. Aspirations failure is a consequence of poverty, rather than a cause. We specify the conditions under which raising aspirations alone is sufficient to help escape from a poverty trap, even without relaxing material constraints.