Aspiring to a Better Future: Can a Simple Psychological Intervention Reduce Poverty?


How do aspirations influence investment decisions for people living in poverty? Does this change as peoples economic conditions improve? To answer these questions, we design a workshop teaching techniques to raise aspirations and plan to achieve them. We cross-randomise this with large unconditional cash transfers in a 415-village, 8,300-person, 1.5-year experiment in Kenya. The workshop substantially raises aspirations, investment, and living standards. But the workshop +cash produces similar effects to cash alone, potentially because cash raises aspirations. Thus, helping people living in poverty set higher aspirations can raise investment and living standards, but improving economic conditions can activate the same process.

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Welfare and Poverty
NBER Working Paper 31735