Poverty and Aspirations Failure

Abstract

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.The Chronic Poverty Report estimates that 320-443 million people live trapped in chronic poverty: that is, these people remain poor for much or all of their lives and their children are likely to inherit their poverty as well. An influential literature on poverty traps argues that such persistent poverty is driven by constraints that are external to the individual. Examples of such constraints are credit or insurance market imperfections (

Transitions through homelessness: the impact of psychosocial factors on well-being and outcomes in a homeless sample

“…In the long term this may compound social isolation and reinforce negative self-beliefs (Kasser & Ryan, 1996). These results are consistent with the broader literature on poverty, aspirations, and well-being; specifically the growing body of research that suggests poverty and inequality can lead to expectations of 'aspiration failure', defined as failure to aspire to one's own potential (Bertrand, Mullainathan, & Shafir, 2004;Copestake & Camfield, 2010;Dalton, Ghosal, & Mani, 2016). This can lead to reduced well-being and some suggest perpetuates the cycle of poverty by becoming a self-fulfilling prophecy (Bertrand et al, 2004;Copestake & Camfield, 2010;Dalton et al, 2016).…”

The Missing Link Between Parents’ Preferences and Daughters’ Survival: The Moderator Effect of Societal Discrimination

“…In a recent study, Dalton et al (2015) examined how the failure to internalize the long-term returns of current decisions implies lower aspirations and achievements for people suffering from discrimination and poverty (compared with their own potential). In contexts of prevalent discrimination against young girls, the aspirations for daughters' survival might be seriously reduced.…”

“…The rise of a gap in aspirations with discrimination makes it possible that noncognitive skills contribute to the exacerbation of chronic deprivation (Ghosal et al, 2013). Going further in this direction, Dalton, Ghosal and Mani (2015) examine how the inability of human beings to internalize the long-term consequences of their actions (e.g., the long-term returns of effort) might be one of the main origins of aspiration failure, and the low effort levels undertaken by the underprivileged population.…”

Individuals, interactions and institutions: How economic inequality affects organizations

“…As a result, they tend to have lower aspirations and thus expend less effort, which results in lower achievement. In turn, the lower achievement reduces their aspirations and effort in the future, thus trapping them in a cycle of low aspiration and low effort (Dalton et al, 2014).…”