Aspirations, psychosocial outcomes and saving in rural Ethiopia

Tanguy Bernard, Stefan Dercon, Kate Orkin, Alemayhu Seyoum Tafesse18 March 2011

Aspirations

Development discourse and praxis focus on ‘opportunities’

Why do the poor not ‘invest’? Ethiopians and fatalism

Aspirations A desire or an ambition to achieve something An aim and implied effort to reach it Combination of preferences and beliefs

Related concepts Economics: Satisficing Psychology: Self-efficacy, locus of control Anthropology: Aspirations failures

Common elements Goals/aspirations are important to determine success Evolution through time in response to circumstances

Aspirations and poverty

Weak capacity to aspire can translate into low or no investments

Capacity to aspire not evenly distributed between rich and poor the poor have fewer resources for own

experience and observation of others, contributing to low level of aspiration (Appadurai, 2001)

the poor have fewer resources to allocate to modification of their beliefs and perceptions. Prior beliefs about inability for positive changes are thus perpetuated

the poor have little motivation to allocate resources to modify their beliefs and perception

Motivation for research

Difficult to identify effects of aspirations Individual’s resources affect aspirations Individual’s aspirations affect resources

Exogenous shock to aspirations: mini-documentaries of local success stories screened to randomly selected individuals

People who watch a documentary have higher aspirations and more forward-looking behaviour

If more people in a village watch a documentary, aspirations and forward-looking behaviour increases more

Treatment (1) Cluster of 4 villages Individual treatment

Within village TREATMENT: 6 hh given tickets for

documentary 4 short mini-documentaries of local

success stories PLACEBO: 6hh given tickets for a

recreational movie Local television show usually played

around festivals CONTROL: 6 hh surveyed but not given

tickets Village treatment

In 2 villages in the cluster of 4, 18 households are given tickets to a documentary

In the other 2 villages, 18 households are given tickets to a move

Treatment (2)

Village 36 movie

6 documentary

6 nothing+

18 movie

Village 26 movie

6 documentary

6 nothing+18

documentary

Village 16 movie

6 documentary

6 nothing+

18 movie

Village 46 movie

6 documentary

6 nothing+18

documentary

Light = movie

Dark = documentary

BLUE = Surveyed and invited

RED = Invited

BLACK = Surveyed, no invite

Sampling

Village treatment Villages grouped into clusters of 4

villages Then villages randomised: 2 treatment,

2 control

Within each village Households randomly selected for

treatment, control and placebo Tickets for head and head’s spouse in

each household No replacement

3 rounds Baseline pre-treatment (Sept-Dec

2010) Aspirations retest immediately after

treatment Follow-up (Mar-May 2011)

Balance and compliance

Treatment Placebo Control Total

Given ticket 705 729 722 2156

Interviewed baseline 696 725 704 2125

Went to screening 670 705 0 1375

Did second round 686 657 662 2005

All sections 659 657 662 1978

Non-compliance rate 6.52 9.88 8.31 8.26

Sample balanced on gender, literacy, age and most outcomes

Aspiration measures

200,000 ETB ~ value of one harvest of chat from one hectare

100,000 ETB ~ value of one harvest of chat from half a hectare

0 ETB

1 Annual cash income

4 dimensions Annual income in cash Assets – house, furniture, consumer

goods, vehicles Social status – whether people in the

village ask advice on decisions Level of education of oldest child

“What is the level of <> you would like to achieve?”

Standardised

Aspirations

No simple treatment effects and, in fact, a slight decline in wealth aspirations

Further investigation on village treatment

Income Wealth Status Education

Treatment effect 0.029 -0.118 0.072 0.054

0.704 0.052* 0.381 0.548

Placebo effect 0.087 -0.088 0.003 0.068

0.163 0.262 0.967 0.422

Treatment - placebo -0.059 -0.029 0.069 -0.014

0.341 0.826 0.111 0.194

Respondents 1911 1911 1911 1911

Villages 64 64 64 64

* p<0.10, ** p<0.05, *** p<0.01. p values are reported.

Standard errors are robust and corrected for clustering.

Controls for gender, literacy, age, baseline treatment status and time.

Psychosocial measures (1): locus of control

Comes from Rotter’s (1966) social learning theory External control: belief that outcomes are not

determined by personal efforts Internal control: belief that outcomes are

contingent upon actions Internal associated with more active pursuit of

valued goals, information seeking, autonomous decision making, sense of wellbeing.

Measure is an adaptation of Levenson (1981) 4 point scale, 15 items Chance

“To a great extent my life is controlled by accidental/chance happenings.”

“Often there is no chance of protecting my personal interests from bad luck happenings.”

Powerful others “My life is chiefly controlled by other powerful

people.” “People like myself have very little chance of

protecting our personal interests when they conflict with those of more powerful people.”

Internal “When I get what I want, it’s usually because I worked

hard for it.” “My life is determined by my own actions.”

Psychosocial measures (2): Causes of poverty

Perceptions of causes of poverty Feagin’s (1972) Attribution for Poverty

Scale 4 point scale

“I am going to read you some reasons people give for why poor people are poor.”

Structural “The distribution of land between poor and

rich people is uneven” “They lack opportunities due to the fact

that they come from poor families” Fatalistic

“They have bad fate/destiny” “They lack luck”

Individual “They lack the ability to manage money or

other assets” “They do not actively seek to improve their

lives”

Psychosocial measures

Decrease in proportion of treatment group who agree that poverty has “fatalistic” causes

Near increase in proportion of treatment group who agree that poverty has “individual” causes

Chance Internal Powerful others Fate Structural Individual

Treatment effect -0.036 -0.055 0.078 -0.151 0.094 0.106

0.674 0.565 0.373 0.055* 0.146 0.113

Placebo effect -0.064 -0.045 -0.005 -0.045 0.08 0.119

0.411 0.593 0.941 0.549 0.222 0.079*

Treatment - placebo 0.027 -0.01 0.083 -0.106 0.014 -0.013

0.528 0.683 0.597 0.905 0.296 0.435

Respondents 1911 1911 3822 3822 3822 3822

Villages 64 64 64 64 64 64

* p<0.10, ** p<0.05, *** p<0.01. p values are reported.

Standard errors are robust and corrected for clustering.

Controls for gender, literacy, age, baseline treatment status and time.

LOCUS ON CONTROL CAUSES OF POVERTY

Savings

Amount withdrawn from and deposited in savings loans in the last month

Membership of and contributions to iddir (burial societies which can also insure against loss of homes or livestock)

Membership of and contribution to iqqub (savings groups) and voluntary savings and loans groups run by NGO

Savings

Increase in withdrawal and deposit into savings among treatment group Small net increase in savings

No effects on knowledge of VSL programmes, membership of VSL or iddir, contribution to iddir each month

Has savings Total savings Withdrawn from savings Deposited in savings

Whole sample

Had baseline

savings Whole sample

Had baseline

savings

Treatment effect -0.001 57.68 35.015 118.328 30.93 22.271

0.959 0.677 0.017** 0.043** 0.033** 0.079**

Placebo effect 0.017 -73.192 -15.881 -56.33 -34.773 -127.511

0.477 0.692 0.509 0.6 0.5 0.599

Treatment - placebo -0.018 130.873 50.895 174.658 65.703 149.782

0.099 0.401 0.378 0.325 0.557 0.486

Respondents 3822 3822 3822 887 3822 887

Villages 64 64 64 59 64 59

* p<0.10, ** p<0.05, *** p<0.01. p values are reported.

Standard errors are robust and corrected for clustering.

Controls for gender, literacy, age, baseline treatment status and time.

Demand for credit

Actual loans Number of loans taken in last six months Amount of each loan No effects

Hypothetical loans “Someone from a microfinance

institution came to you and offered to lend you any amount of money you ask without charging interest or service charge.”

“How much would you ask for?” In one year In five years In ten years

What would you use the money for?

Hypothetical loans

Increase in amount treatment group would ask for in hypothetical loans in 5 years

In 1 year In 5 years In 10 years

Treatment effect 1310.722 5058.554 3238.836

0.127 0.024** 0.147

Placebo effect 1173.248 1095.106 -1596.74

0.166 0.559 0.569

Treatment - placebo 137.474 3963.448 4835.576

0.137 0.949 0.083

Respondents 1966 1966 1966

Villages 63 63 63

* p<0.10, ** p<0.05, *** p<0.01. p values are reported.

DESIRED HYPOTHETICAL LOANS

Gender and literacy affect aspirations

Male Literate Age

Aspirations Income +

Wealth + +

Status + +

Education + +

Chance - - +

Powerful others + +

Internal - -

Fate - - +

Structural

Individual + +

Savings Has savings - +

Total savings +

Withdrawn

Deposited

1 year + + -

5 years + + -

10 years + + -

CONTROL VARIABLES

Locus of

control

Causes of

poverty

Hypothetical

loan

Men and the literate Higher aspirations Less belief in

chance and fate More belief in

powerful others More belief in

individual control Higher hypothetical

demand for credit

Literate people have higher savings

Conclusion

Preliminary results Men and literate people have

higher aspirations on our measure

Some effects of intervention detected beliefs about the causes of poverty savings, and use of saving accounts hypothetical loans but not our measures of aspirations

Further (more structural) analysis Expanding interest – Malawi,

Pakistan via IFPRI

Contributions

Research assistance: Fanaye Tadesse

Data cleaning: Fanaye Tadesse, Ibrahim Hassen

Survey management: Bezabih Tesfaye, Tewodros Abate

Administrative support: Mahlet Mekuria, Kate Prudden, CSAE staff, CARE facilitators

Pocket survey training and support: Felix Schmieding

Pocket survey support: Andrew Zeitlin, Justin Sandefur, Richard Payne, Naureen Karachiwalla

A very capable and willing team of enumerators

All participants