Aspirations in Rural Ethiopia – Some Findings from a Randomized Field Experiment

1. Aspirations in Rural Ethiopia – Some Findings from a Randomized Field Experiment Tanguy Bernard1, Stefan Dercon2, Kate Orkin2, Fanaye Tadesse1, Alemayehu Seyoum Taffesse1 and Ibrahim Worku1 1International Food Policy Research Institute, 2 University of Oxford May 2, 2013 Africa House New York University

2. Outline • Motivation • Elements of the aspirations framework • Aspirations project • Field experiment – design and findings

3. Motivation – why aspirations • Conceptual – ‘opportunities’ • Empirical – Why do the poor not ‘invest’? • Ethiopians and fatalism? • Focus 1 - ‘external circumstances’ and ‘opportunities’. • Low returns to investments; • Unexploited opportunities due to lack of information or knowledge; • Social constraints; • Focus 2 - constraints associated with the manifested attributesof decision makers • Identity issues: sense of self; • Psychological issues: impatience, commitment, and psychological barriers • Aspirations failure perspective

4. Aspirations: A desire or an ambition to achieve something An aim and implied effort to reach it A set of future-regarding preferences Related concepts Economics : Satisficing Psychology : Self-efficacy, locus of control Anthropology : Aspiration failures Common elements Goals and aspirations are important determinants of success; Evolution through time in response to circumstances; Role of social comparisons and learning from relevant others, An individual-level yet culturally (collectively) determined attribute  towards exploration of individual-group symbiosis Elements of the Aspirations Perspective

5. What are Aspirations? Aspirations have two distinctive aspects: Future-oriented - are goals that can only be satisfied at some future time (differ from immediate gratifications); Motivators - are goals individuals are willing, in principle, to invest time, effort or money in to attain (different from idle daydreams and wishes) Note: the ‘willingness to invest’ is ‘potential’, or ‘conditional’ Aspirations and expectations – preference vs. beliefs; Elements of the Aspirations Perspective

6. Elements of the Aspirations Perspective Why are aspirations important/useful? Aspirations (or the capacity to aspire): • Reflect bounded rationality; • Are socially determined (social interaction); • Are distributed unevenly within communities. • Condition individual behaviour and well-being • Useful device in analysing and/or addressing poverty

7. Elements of the Aspirations Perspective How do aspirations condition individual behaviour? • Aspiration window: • an individual’s cognitive world, his/her zone of ‘similar’, ‘attainable’ individuals; • Reflects the information and economic opportunities of the local environment; • Multi-dimensional (‘similarity’); • Aspiration gap: • difference between the aspired ‘state’ and current ‘state’ • Conditions future-oriented behaviour - inverted U relationship between gap and effort A possible outcome is anaspiration failure - lack of pro-active behaviour (or ‘under-investment’) towards filling the aspiration gap

8. Conceptual Schema

9. Elements of the Aspirations Perspective Measurement Issues • Aspirations are not directly observable • Revealed by observed behaviour: interpretation issues (linking aspirations and behaviour) • Elicited using subjective questions: measurement issues • Limits to subjective assessment: • Subjects: subjects’ willingness to report private knowledge, evaluation apprehension, and subject role playing • Instruments (attributes of): order of questions (anchoring), the number of categories on the rating scale (odd-even), the adjectives that are used as the endpoints of the rating scale, and the adverbs that describe scale categories. (e.g. Delavande et al. (2009), Bertrand and Mullainathan (2001) for reviews)

10. Elements of the Aspirations Perspective Identification issues • individual characteristicsaffect aspirations, aspiration windows and behaviour (e.g. schooling levels, wealth, and family background), Particularly the endogeneity of the aspiration window a key hurdle • aspirations ‘cause’ success – a person with higher aspirations may be more successful. • Success ‘causes’ aspirations – a successful person may revise his/her aspiration to a higher level, or experiment, panel data

11. The “Aspirations” project Step 1 – correlates of aspiration-related concepts Step 2 – test and validate a measurement strategy Step 3 – assess validity of the “aspiration window” hypothesis • An experiment • Exogenous shock to aspirations: Mini-documentaries of local success stories screened to randomly selected individuals. Placebo: local TV show. • 3 rounds of data • Baseline pre-treatment (Sept-Dec 2010) • Aspirations retest immediately after treatment • Follow-up (Mar-May 2011)

12. Field Experiment - Aspirations 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

13. Field Experiment – Design • 16 Screening sites, 4 villages/screening site (2 Treatment, 2 Control), • 36 households/village (18 households surveyed, 18 households not surveyed) Treatment village Placebo village Surveyed : Treatment, 6 households (12 individuals)/village Placebo, 6 households (12 individuals)/village Control, 6 households (12 individuals)/village Non-Surveyed : Treatment, 18 households (36 individuals)/ treatment village Placebo, 18 households (36 individuals)/ placebo village

14. On going experiment

15. Field Experiment – Baseline Correlates of Aspirations * p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects included but not reported; Robust standard errors in parentheses

16. Balance * p<0.1; ** p<0.05; *** p<0.01 Sample balanced on gender, literacy, age and most outcomes

17. Field Experiment - Compliance and Power of Treatment Assessment of Documentaries and Placebo * p<0.1; ** p<0.05; *** p<0.01

18. Field Experiment - Compliance and Power of Treatment Table 5 – Relevance of documentaries Cell proportions are reported. The totals of all cells add up to 100. N=642

19. Impact on Aspirations - Estimation strategy

20. Treatment and Placebo Effects on Aspirations * p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

21. Treatment and Placebo Effects on Aspirations * p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

22. Treatment and Placebo Effects on Future-Oriented Behaviour Table 10 – Treatment effects on savings behaviour * p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects and controls for age, age², gender and education not reported; Robust standard errors in parenthesis

23. Treatment and Placebo Effects on Future-Oriented Behaviour Table A1 - Direct and indirect treatment effect on Locus of Control * p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

24. Treatment and Placebo Effects on Future-Oriented Behaviour Table A2 - Direct and indirect treatment effect on Perception of Poverty * p<0.1; ** p<0.05; *** p<0.01; Screening site fixed effects not reported; Robust standard errors in parenthesis

25. Observations • "Weak" treatment, but: • Documentaries affected aspirations, expectations, savings behaviour, and perceptions more than the placebo even 6 months after treatment; • Direct and, even more visible, indirect (group) effects are detected – more of an aspiration window story rather than a role model one; • Further analysis; • Expanding coverage – Malawi, Pakistan via IFPRI;