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Poverty and aspirations failure

Dalton,P.S.
; 
Ghosal,S.
; 
Mani,A.
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 behavioral bias in setting aspirations. We show that poverty can exacerbate the effects of this behavioral bias leading to aspirations failure and hence, a behavioral 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.
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Date
2016-02
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Tilburg University Research Output Collection
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Keywords
aspirations, poverty traps, O10 - General, O15 - Human Resources ; Human Development ; Income Distribution ; Migration, O12 - Microeconomic Analyses of Economic Development, D03 - Behavioral Microeconomics ; Underlying Principles
Citation
Dalton, P S, Ghosal, S & Mani, A 2016, 'Poverty and aspirations failure', Economic Journal, vol. 126, no. 590, pp. 165-188. https://doi.org/10.1111/ecoj.12210
URI
https://hdl.handle.net/20.500.14602/61343
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