Aspirations and Poverty in Rural Ethiopia

1. 1
Aspirations and Poverty in Rural Ethiopia
Tanguy Bernard1, Stefan Dercon2, Kate Orkin3, Fanaye Tadesse1,
Alemayehu Seyoum Taffesse1, and Ibrahim Worku1
1International Food Policy Research Institute
2 University of Oxford, 3 University of Cambridge
iiG Conference: Improving Institutions for Growth
20-21 March 2015
St Catherine’s College, University of Oxford
27/03/2015

2.  Motivation and research agenda;
 Aspirations
 Aspiration and poverty – suggestive evidence
 Field experiment – design and findings
 Report on the direct effects on aspirations;
 Summarize results related to beliefs, preferences, and future-oriented
behaviour
Outline
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3. Motivation - Initial
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 Fatalism
 Examples:
“We live only for today”;
“It is a life of no thought for tomorrow”;
“We have neither a dream nor an imagination”
Rahmato and Kidanu (1999)
 General - lack of proactive and systematic effort to better one’s own
life;
 Economic perspective – not making the ‘investments to better one's
life’ or exploit and/or create opportunities.
Evidence: underinvestment by the poor is common and can be a source
of persistence in poverty and inequality

4. Step 1: Correlations
Step 2: Measurement
Step 3: Treatment
Step 4: Experiment
Step 5: Replications
Research program
With parallel implementation as
demanded by circumstances

5. Aspirations – what, why?
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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 );
 Are distributed unevenly within communities – beliefs, experience,
personality;
 Are context-dependent and changing;

6. Correlates and Selected Outcomes
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Improved
seed use
Fertilizer
use
Radio
ownership
Girls
school
ratio
School
ratio – all
school-age
children
LoC - Internal
0.0064** 0.0060* 0.0095*** 0.0071*** 0.0050**
(0.003) (0.003) (0.002) (0.002) (0.002)
LoC - Chance
-0.0015 -0.0144*** -0.0034* 0.0031 0.0016
-0.003 -0.004 (0.002) (0.003) (0.003)
LoC-Others
-0.0035 -0.0044 -0.0040** -0.0097*** -0.0086***
-0.003 -0.003 (0.002) (0.003) (0.003)
Self-reported
wealth
0.0361*** 0.0647*** 0.0496*** 0.0375*** 0.0307***
Controls – sex, age, education; village clustered standard errors.

7. Suggestive Evidence - Wealth Aspiration I
Ethiopian Rural Households Survey (ERHS)
 Spatial coverage: 15 Kebeles (villages);
 Temporal coverage: 1993/94-2009 (7 rounds the last three roughly one every 5
years)
Wealth Aspirations
 Round 7 Question: We would now like you to think of your own wealth.
Thinking of a scale from 1 (the lowest or worst level) to 10 (the highest or
best level):
Q39a. At what level do you believe you are currently?
Q39b. At what level would you like to be?
 Estimation
 Use ordered responses to Q39b as the dependent variable;
o ordered probit model (basic, generalized, semi-nonparametric);
 Robust/Clustered standard errors
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8. Marginal Effects – All Rounds
dy/dx per one SD change (%)
Shock
Median income
growth of
neighbors
(round7-round6)
Median
income
growth (all
rounds)
Number of
rounds
respondent
was poor
Pr(Wealth Aspiration = 1) 1.92 -3.44 0.00 2.30
Pr(Wealth Aspiration = 2) 0.79 -3.44 0.00 0.88
Pr(Wealth Aspiration = 3) 1.36 0.00 -2.60 0.00
Pr(Wealth Aspiration = 4) -3.84 -6.88 5.19 -2.65
Pr(Wealth Aspiration = 5) -0.23 13.77 0.00 -0.71
Mean (SD) 2.4 (1.1) -18.3 (34.4) 3.3 (26.0) 2.8 (1.8)
Note: Figures in red are statistically significant at least at 10% level of significance. Controls
include: sex, age, marital status, education, participation in non-farm activities, Iddir
membership.
Comparable results when assets or self-reported wealth rank is used instead of
income, as well as when the analysis is restricted to rounds 6 and 7 only;
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9. Suggestive Evidence - Wealth Aspirations II
dy/dx per one SD change (%)
Self-reported
wealth
Median self-reported
wealth in the village
Log (Asset Aspiration)
Mean = 11.02, SD = 1.37
29.0 9.1
Mean (SD) 4.4 (1.1) 4.13 (0.35)
Note: Figures in red are statistically significant at least at 1% level of significance.
Controls include: sex, age, marital status, education, participation in non-farm activities,
Iddir membership.
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Insurance Data
 Surveys of the Index Insurance Study 2011-2014;
 Baseline and four follow-up household surveys of 1760 randomly
selected households.
 Aspiration module added in the last round;

10. Observations
 Results
 Poorer individuals have on average lower aspirations;
 Results persist across specifications;
 Panel data used, but happy to consider them as correlations;
 Issues
 Measurement – revealed vs. declared – develop an instrument
 Identification – correlations vs. causal links (poverty–low
aspirations) – field experiment
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11. Specific Question
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Is it possible to alter poor individuals’ aspirations and link
changes thereof to behavior using an experimental design in a
real-world setting?
 Measure aspirations;
 Introduce an exogenous shock to aspiration;
 Estimate impact on aspirations, correlates/determinants, and
behaviour;

12.  Four dimensions
 income, assets, education, social status
 weights
 Five questions;
 What is the maximum (minimum) level of (dimension k) that one can have in
have in your current neighborhood?
 What is the minimum level of (dimension k) that one can have in your current
current neighborhood?”
 What is the level of (dimension k) that you have at present?”
 What is the level of (dimension k) that you would like to achieve in your life?”
Measurement of Aspiration
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13. 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 agriculture or small business.
o No other intervention.
o 4 x 15 minute documentaries (2 men, 2 women) = 1 hour in Oromiffa
o 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).

14. On going experiment
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15. 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
w𝑖
𝑘 𝑎𝑖
𝑘
− 𝜇 𝑘
𝜎 𝑘
𝑎𝑖
𝑘
= individual 𝑖’s aspiration response to dimension 𝑘.
𝑤𝑖
𝑘
= weight individual 𝑖 assigned to dimension 𝑘.
𝜇 𝑘, 𝜎 𝑘 = village sample mean and standard deviation for dimension 𝑘.

16. Specification
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𝐴𝑖 =
𝑘
w𝑖
𝑘 𝑎𝑖
𝑘
− 𝜇 𝑘
𝜎 𝑘
𝑎𝑖
𝑘
= individual 𝑖’s aspiration response to dimension 𝑘.
𝑤𝑖
𝑘
= weight individual 𝑖 assigned to dimension 𝑘.
𝜇 𝑘, 𝜎 𝑘 = village sample mean and standard deviation for dimension 𝑘.

17. 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 treatment effects on aspiration immediately (about 20% of SD).
 No placebo effect;

18. 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 (about 3-5% of SD);
 No placebo effect;

19. 27/03/2015 19
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 and time preferences.
 Improvements in individuals’ sense that they control their lives (LoC,
causes of poverty).
 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 are not robust to multiple testing.

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Observations
 Note:
 The treatment is “weak“ – an aspirational intervention alone;
 Effects on behaviour are small and diminishing – but can have lasting
effects (e.g. one additional year of schooling)
 Repeat survey to be conducted soon

21. 27/03/2015 21
Thank you