Aspiration Adaptation in Resource-Constrained Environments
57 Pages Posted: 24 Jan 2018
Date Written: January 16, 2018
We use a multi-country ﬁeld experiment to test the eﬀect of a slum-housing intervention on the housing aspirations of non-beneﬁciary neighbors. Initially after treatment, nontreated households’ aspirations to upgrade their dwelling are signiﬁcantly higher compared to the treatment group, suggesting that they aspire to “keep-up” with their treatment Joneses’. No eﬀects are found, however, on housing investments. Eight months later, the aspirational eﬀect disappears. Estimates based on a structural model of aspiration adaptation show that the decay rate is 38% per month. Our evidence suggests that simply fostering higher aspirations may be insuﬃcient to encourage forward-looking behavior among the poor.
Keywords: Aspirations, Adaptation, Poverty Traps, Experimental Evidence
JEL Classification: O1
Suggested Citation: Suggested Citation