Aspiration failure and rural development in Ethiopia

What are the determinants of the “capacity to aspire”? What is the link between aspirations and individual economic behaviour?

This project explores the extent and significance of aspirations failures in Ethiopia. More specifically, the aim is to develop and implement an empirical approach to the following questions proposed in Ray (2002, 2006): What are the determinants of the “capacity to aspire”? What is the link between aspirations and individual economic behaviour? How might aspirations be affected by economic and social change? How can aspirations be affected by deliberate group action?

Aspirations reflect an individual’s cognitive world, his/her zone of similar attainable individuals, labelled by Ray (2006) as that individual’s aspiration window. This aspiration window is determined by the individual’s observations of his/her peers to form comparisons, as well as the information and economic opportunities of the local environment.

Ray (2006) argues that one additional concept is required before the link between aspirations and individual behaviour can be established. This is the aspiration gap – the difference between a person’s contemporaneous standard of living and the standard of living she aspires to. It is this gap, not aspirations as such, that conditions future-regarding behaviour. The behavioural response of individuals to their respective aspiration gap may take the form of an aspiration failure. Aspiration failure occurs as the lack of pro-active behaviour (or under-investment in economic terms) towards filling the aspiration gap.

Based on this framework, the research project aims to measure well-being aspirations and corresponding aspirations gaps, ascertain the dimensions and the size of the aspirations window, identify individual, household, and community characteristics that may impinge upon aspirations and establish the existence of aspirations failure. i.e. identify and test the significance of the aspirations gaps to economic behaviour.

The key hurdle in testing the predictions of the aspirations approach is the endogeneity of the aspirations window. This hurdle can be overcome by the identification and /or generation of robust instruments. One way of doing so is via an experiment designed to influence the aspiration window independently from the individual’s characteristics or socio-economic environment. The project proposes to follow this route.

Broadly, the experiment the project proposes consists of broadcasting a series of short documentaries on case studies relevant to households’ economic and social conditions. In particular, the documentaries transmitted will trace the experience of successful local entrepreneurs which households can reasonably identify with. A differentiated series of documentaries will be used to highlight particular features which may be relevant for the appropriate aspiration window (such as gender and age group). The individual episodes in the series will be randomly assigned to different villages. A randomly selected group of villages where ‘placebos’ will be broadcast will serve as a control group. The effects of the broadcasts will be captured through a baseline survey and a comparison resurvey of the same sites.