Aspirations and Financial Decisions: Experimental Evidence from the Philippines / David McKenzie, Aakash Mohpal, Dean Yang.

Format:

Book

Author/Creator:

McKenzie, David.

Contributor:

National Bureau of Economic Research.

Mohpal, Aakash.

Yang, Dean.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28607.

NBER working paper series no. w28607

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

A randomized experiment among poor entrepreneurs tested the impact of exogenously inducing higher financial aspirations. In theory, raising aspirations could have positive effects by inducing higher effort, but could also reduce effort if unmet aspirations lead to frustration. Treatment resulted in more ambitious savings goals, but nearly all individuals fell far short of reaching these goals. Two years later, treated individuals had not saved more, and actually had lower borrowing and business investments. Treatment also reduced belief in the amount of control over one's life. Setting aspirations too high can lead to frustration, leading individuals to reduce their economic investments.

Notes:

Print version record

March 2021.