96273.pdf - Published Version
Available under License Creative Commons Attribution.
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 behavioural bias in setting aspirations. We show that poverty can exacerbate the effects of this behavioural bias leading to aspirations failure and hence, a behavioural 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.
|Additional Information:||Funded by: ESRC-DFID. Grant Number: RES-167-25-0364.|
|Glasgow Author(s) Enlighten ID:||Ghosal, Professor Sayantan|
|Authors:||Dalton, P. S., Ghosal, S., and Mani, A.|
|College/School:||College of Social Sciences > Adam Smith Business School > Economics|
|Journal Name:||Economic Journal|
|Copyright Holders:||Copyright © 2016 The Authors|
|First Published:||First published in Economic Journal 126(590):165-188|
|Publisher Policy:||Reproduced under a Creative Commons License|