The document discusses the relationship between psychological outcomes, such as aspirations and trust, and poverty, highlighting how low aspirations can create a behavioral poverty trap and undermine development efforts. It presents evidence showing that development interventions can raise aspirations and trust, particularly through social protection programs that mitigate the negative psychological effects of poverty. Policymakers are encouraged to incorporate these psychological factors into their strategies to improve economic and social outcomes.

1. PIM Webinar:
Aspirations, Trust, and Poverty
Reduction
Katrina Kosec
Senior Research Fellow
IFPRI
December 19, 2018

2. Focus: The Psychological Costs of
Poverty
• Experiencing poverty and economic vulnerability is
closely linked with two negative and costly psychological
phenomena:
1) Having low aspirations, or ambitions, for the future
(Kosec and Mo 2017)
2) Having low levels of trust or confidence in one’s
government (Kosec and Mo 2018; Evans et al. 2019)
• Why is it important to take these tolls into account, and
what can policymakers do to reduce any negative effects?

3. Outline of the Talk
1. Discussion of why psychological outcomes like
aspirations and trust are so important
2. Evidence on the relationship between poverty
and economic vulnerability and these
psychological outcomes
3. Discussion of the ability and role of policy for
addressing any negative psychological impacts of
poverty and economic vulnerability

4. What are Aspirations?
• Aspirations are individuals' goals for the future
• All individuals have aspirations about various
‘domains’ in their life
• Domains commonly examined include household
income, household asset wealth, educational
attainment, social status, and security
• Citizens with high aspirations “visualize the future
and engage in forward-looking behavior” (Dalton,
Ghosal, and Mani, 2015)

5. Typical Domains of Aspirations: Five
Considered by Kosec et al. (2018)
Income Asset wealth Social status
Education for children Security

6. Share of 100 Units of Local Currency That Adults
Surveyed as part of the 2016 Life in Kyrgyzstan Survey
Placed on Each Domain (Kosec et al. 2018)

7. How Are Aspirations Formed?
• Aspirations are largely socially determined;
individuals form aspirations by observing those in
their ‘cognitive window’ (Genicot and Ray 2017)
• But there is no single determinant; influenced by
external factors and internal, cognitive processes
(Ray 2006)
• Social circle, interactions with community and
government, life experiences, personality, awareness,
perception, reasoning, and judgment

8. Policymakers Can Move
Aspirations!
• A number of development interventions have been
shown to raise aspirations— often by:
• Exposing individuals to role models (Beaman et al.,
2012; Bernard et al., 2014, 2015; Riley, 2017)
• Introducing well-paid job opportunities (Jensen, 2012)
• Increasing interactions of women with their peers
(Dasgupta et al., 2015; Field et al., 2016)

9. Why Are Low Aspirations Dangerous?
• Can lead to a behavioral poverty trap:
• If the poor do not think their future can be better
than it is today, they may choose a low level of
aspirations and spend little effort improving their life
(Duflo 2013; Dalton et al., 2015)
• individuals with low aspirations may be afflicted by a
pathological conservatism, whereby they forgo even
small and feasible costs with potentially large
benefits for fear of losing what they already possess
(Ray, 2006)

10. Why Are Low Aspirations Dangerous?
• Can lead to wasted development spending or
misguided policies:
• Many development interventions focus on providing
the poor with resources (e.g., cash, credit, training,
etc), but individuals with low aspirations may fail to
take up or make maximal use of these opportunities
(Bernard et al., 2014, 2015)

11. Why are High Aspirations Helpful?
• High-aspiring individuals tend to:
• Have higher incomes (Zax and Rees 2002)
• Hold salaried or white-collar jobs and take on community
leadership roles (Wydick et al. 2013)
• Criticize their government when they experience poverty
and relative deprivation—helping to foster government
accountability (Healy et al. 2017)
• IFPRI research by Bernard et al. (2014), Kosec and Mo
(2017), and Kosec et al. (2018) shows that aspirations
also contribute to forward looking economic,
political, and social behaviors

12. The Future in Mind: Aspirations and
Forward-Looking Behavior in Rural Ethiopia
(Bernard et al. 2014)
• Show that aspirations can be impacted durably by a
development intervention—specifically, showing
individuals’ documentaries of individuals who have
been successful due to their own hard work and
investments
• The documentaries also increased forward-looking
economic behavior, as a result of raising aspirations

13. Aspirations Increase Total Savings, Credit, and
Investments in Education (Bernard et al. 2014)
Has
savings
Total
savings
Took
out
credit
Total
credit
Children 6-
15 enrolled
in school
Education
spending
Effect of
viewing video 0.03 97.05* 0.03 20.70* 0.21*** 32.99*
(0.02) (52.12) (0.02) (11.59) (0.06) (18.76)
# Households 2063 2051 2063 2044 1113 1104
Control group
mean 0.39 182.36 0.34 100.99 1.23 197.42

14. Aspirations and the Role of Social Protection:
Evidence from a Natural Disaster in Rural
Pakistan (Kosec and Mo 2017)
• Consider approx. 3500 individuals (male and
female) surveyed in 76 rural villages in rural
Pakistan in 2012
• Show that, controlling for a host of other factors,
individuals with higher aspirations engage in
more forward-looking economic and political
behaviors

15. Aspirations Lead to Forward-Looking
Behaviors: Evidence from Rural Pakistan
(Kosec and Mo 2017)

16. Aspirations and Women's Empowerment:
Evidence from Kyrgyzstan (Kosec et al. 2018)
• Use data on the aspirations, gender attitudes, and reports
about women's involvement in decision-making of
women and their husbands in 2,529 households surveyed
as part of the 2016 round of the Life in Kyrgyzstan Survey
• Employ an instrumental variable strategy using ‘predicted’
aspirations to instrument for aspirations
• Those with higher aspirations tend to have more
egalitarian attitudes toward women and involve women
in household decision-making

17. High Aspirations of Women and Men Lead to More
Egalitarian Gender Attitudes: Evidence from
Kyrgyzstan (Kosec et al. 2018)

18. High Aspirations of Women Lead to Greater
Involvement of Women in Household Decision-
Making: Evidence from Kyrgyzstan (Kosec et al. 2018)

19. Why is Trust in Government
Important?
• Social trust plays a role equal to that of physical
capital in determining economic prosperity
(Fukuyama 1995)
• A lack of trust can lead to citizens disengagement
and a breakdown in accountability relationships in
government (World Bank 2016)

20. How Does Poverty and Economic
Vulnerability Affect Aspirations?
• Kosec and Khan (2016) show that similar individuals
living in communities with worse infrastructure (e.g.,
mud roads, far from railway station) or in communities
without organized meetings to discuss community
issues and events had lower aspirations
• Kosec and Mo (2017) show that “unanticipated”
exposure to Pakistan’s devastating 2010 floods—i.e.
controlling for average levels of and variability in rainfall
in the past—massively lowered individuals’ aspirations
1.5 years later

21. How Does Poverty and Economic
Vulnerability Affect Trust?
• Healy et al. (2017) and Kosec and Mo (2017) show that
individuals in rural Pakistan experimentally primed in 2013 to
feel relatively poor and vulnerable were less likely to trust
their government than were individuals not primed in this way
• Individuals were asked what their income was and given five
answer choices (A, B, C, D, and E). For ½ of respondents, we
selected response options so that their income was likely to be
the middle choice (i.e., C), while for the other half, it was likely
to be the bottom choice (i.e., A)
• Evans et al. (2019) show that randomized receipt of a cash
transfer program increased trust in government

22. What can Policymakers do to Blunt the Negative
Psychological Effects of Poverty and Economic
Vulnerability?
• IFPRI research by Kosec and Mo (2017), Kosec and Mo
(2018), and Evans et al. (2019) shows that government
social protection can help address the negative impacts
of poverty on aspirations and trust
• The first two studies consider rural Pakistan, and the third
considers rural Tanzania

23. Aspirations and the Role of Social
Protection: Evidence from a Natural Disaster
in Rural Pakistan (Kosec and Mo 2017)
• Consider approx. 2000 households in rural Pakistan,
surveyed in 2012 (1.5 years after devastating 2010 floods)
• “Unanticipated” exposure to the floods significantly
lowered aspirations, especially among the poor
• Receipt of government social protection (flood relief via the
“Watan Card” program; approx. 10% of monthly income for
a year) eliminated the negative impacts
• The value of social protection is underestimated if
aspirations are ignored

24. Receipt of Flood Relief (“Watan Card
Program”) Eliminates Reduction in Aspirations
Due to Flood Exposure (Kosec and Mo 2017)

25. Receipt of Flood Relief (“Watan Card
Program”) Eliminates Reduction in Aspirations
Due to Flood Exposure (Kosec and Mo 2017)

26. The Effects of Social Protection on Trust in
Government: Evidence from an Experiment and
Quasi-Experiment in Pakistan (Kosec and Mo 2018)
• Recall that individuals in rural Pakistan who were primed to
feel relatively poor were less trusting of their government
• Can social protection blunt these negative impacts on trust?
• We compared individuals in households just below a wealth
cutoff, who received a cash transfer program, with individuals
just above the wealth cutoff who did not
• Distrust in government due to being primed to feel relatively
poor and deprived was only present among those who did
NOT get the cash transfer program; for those who received it,
their trust in government was not damaged at all

27. Receipt of a Cash Transfer Program Eliminates Negative
Effects of Feeling Relatively Poor (Kosec and Mo 2018)
Only those primed to feel
relatively poor saw their
aspirations increased by
receipt of a cash transfer
program (The Benazir
Income Support Program)

28. Cash Transfers Increase Trust in Local
Government (Evans et al. 2019)
• Consider approx. 1700 households in rural
Tanzania, surveyed as baseline in 2009 (before a
2010 cash transfer program was implemented), at
midline in 2011, and at endline in 2012
• Cash transfers increased trust in leaders and
perceptions of leaders’ responsiveness and
honesty.
• Beneficiaries reported higher trust in elected
leaders but not in appointed bureaucrats.

29. Cash Transfers Increase Trust in Local
Government: Evidence from Rural Tanzania
(Evans et al. 2019)

30. What Have We Learned?
• Poverty, inequality, and negative economic shocks can lower
individuals’ aspirations, or goals, for the future and erode
their trust in government
• This matters since aspirations and trust contribute to
entrepreneurship, productive investments, civic
engagement, gender equity, and, ultimately, welfare
• Government has the ability to counteract these negative
impacts of poverty, inequality, and shocks through the
provision of targeted social protection
• If we ignore the psychological benefits of social protection
programs, we will underestimate their overall benefits

31. References
• Beaman, L., Duflo, E., Pande, R., and Topalova, P. 2012. “Female leadership raises
aspirations and educational attainment for girls: A policy experiment in India.” Science,
1212382.
• Bernard, T., Dercon, S., Orkin, K., and Seyoum Taffesse, A. 2014. “The future in mind:
Aspirations and forward-looking behaviour in rural Ethiopia.” CSAE Working Paper
Series 2014-16.
• Bernard, T., Dercon, S., Orkin, K., and Seyoum Taffesse, A. 2015. “Will video kill the
radio star? Assessing the potential of targeted exposure to role models through video.”
The World Bank Economic Review 29 (suppl_1), S226–S237.
• Dalton, P. S., Ghosal, S., and Mani, A. 2015. “Poverty and aspirations failure.” The
Economic Journal 126 (590): 165–188.
• Dasgupta, N., Scircle, M. M., and Hunsinger, M. 2015. “Female peers in small work
groups enhance women’s motivation, verbal participation, and career aspirations in
engineering.” Proceedings of the National Academy of Sciences, 201422822.
• Evans, D., Holtemeyer, B., and Kosec, K. 2019. “Cash Transfers Increase Trust in Local
Government.” World Development 114: 138-155.

32. References
• Field, E., S. Jayachandran, R. Pande, and N. Rigol (2016). “Friendship at work: Can peer
effects catalyze female entrepreneurship?” American Economic Journal: Economic
Policy 8 (2): 125–53.
• Fukuyama, F. 1995. Trust: The social virtues and the creation of prosperity. Number D10
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• Genicot, G. and D. Ray. 2017. Aspirations and inequality. Econometrica 85 (2): 489–519.
• Jensen, R. 2012. “Do labor market opportunities affect young women’s work and family
decisions? Experimental evidence from India.” The Quarterly Journal of Economics 127
(2): 753–792.
• Healy, A., Kosec, K., and Mo, C. 2017. “Economic Development, Mobility, and Political
Discontent: An Experimental Test of Tocqueville’s Thesis in Pakistan.” American Political
Science Review 111(3): 605-621.
• Kosec, K. and Khan, H. 2016. “Understanding the Aspirations of the Rural Poor.” In
Agriculture and the Rural Economy In Pakistan, Eds. Spielman, D., Malik, S.J., Dorosh, P.,
and Ahmad, N. University of Pennsylvania Press: Philadelphia.
• Kosec, K., and Mo, C. 2017. “Aspirations and the Role of Social Protection: Evidence
from a Natural Disaster in Rural Pakistan.” World Development 97: 49-66.

33. References
• Kosec, K., and Mo, C. 2018. “The Effects of Social Protection on Trust in Government:
Evidence from an Experiment and Quasi-Experiment in Pakistan.” Unpublished
manuscript.
• Kosec, K., Akramov, K., Mirkasimov, B., and Song, J. 2018. “Aspirations and Women's
Empowerment: Evidence from Kyrgyzstan.” IFPRI Discussion Paper, December 2018.
• Ray, D. (2006). “Aspirations, poverty, and economic change.” Understanding poverty
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• Riley, E. 2017. “Increasing students’ aspirations: the impact of Queen of Katwe on
students’ educational attainment.” CSAE Working Paper WPS/2017-13.
• World Bank. 2016. Making Politics Work for Development: Harnessing Transparency
and Citizen Engagement. World Bank Group: Washington, DC.
• Wydick, B., P. Glewwe, and L. Rutledge (2013). “Does international child sponsorship
work? A six-country study of impacts on adult life outcomes.” Journal of Political
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• Zax, J. S. and D. I. Rees (2002). “IQ, academic performance, environment, and
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