Poverty Identity and Preference for Challenge: Evidence from the U.S. and India

Forthcoming, Journal of Economic Psychology

44 Pages Posted: 3 Apr 2018 Last revised: 14 Oct 2019

See all articles by Sachin Banker

Sachin Banker

University of Utah - David Eccles School of Business

Syon Bhanot

Swarthmore College

Aishwarya Deshpande

Barcelona Graduate School of Economics

Date Written: March 29, 2018

Abstract

One’s personal identity can play an important role in decision-making. We propose that a key identity that shapes behavior among poor populations is conceptualizing oneself as financially insecure, which we term “poverty identity.” Two experiments suggest that this identity can influence one’s propensity to engage in challenging tasks. We first demonstrate in a lab experiment with students that making one’s financial insecurity temporarily salient can reduce preference for challenging tasks. Subsequently, in a lab-in-field experiment conducted in Dharavi, a slum in Mumbai, India, we show that a verbal self-affirmation intervention involving simple, one-on-one conversations with each individual, can counteract the effects of persistent identity salience for the poor in Dharavi by fostering greater preference for more challenging labor tasks. We suggest that the persistence of scarcity can make poverty a continually salient characteristic by which the truly impoverished define who they are. Further, we outline an identity-based theoretical framework which explains behavior among people who temporarily feel poor but also suggests that similar perturbations in identity salience may have a negligible impact on behavior among the very poor. These findings have important implications for models of identity and policy design aimed at improving well-being for disadvantaged populations.

Keywords: behavioral economics, social identity, scarcity, verbal self-affirmation

JEL Classification: D01, D03, D10, J24, I30

Suggested Citation

Banker, Sachin and Bhanot, Syon and Deshpande, Aishwarya, Poverty Identity and Preference for Challenge: Evidence from the U.S. and India (March 29, 2018). Forthcoming, Journal of Economic Psychology, Available at SSRN: https://ssrn.com/abstract=3152592 or http://dx.doi.org/10.2139/ssrn.3152592

Sachin Banker

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Syon Bhanot (Contact Author)

Swarthmore College

500 College Ave
Kohlberg Hall 206
Swarthmore, PA 19081
United States

Aishwarya Deshpande

Barcelona Graduate School of Economics ( email )

Ramon Trias Fargas, 25-27
Barcelona
Spain

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