Failure, Frustration, and Formation of Aspirations in Nepal

I am a bit behind on this, but earlier this year a nice new paper on aspirations was published in the Journal of Economic Behavior & Organization. The paper, entitled “Aspirations Failure and Formation in rural Nepal” is co-authored by a team of researchers who are currently performing really interesting field-work in Nepal. Here is a link to a Feed the Future Policy Brief and here is the abstract to the paper:

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Measuring Hope: A Quantitative Approach – Forthcoming in JDS

I am pleased to report that my paper – written with co-authors Duncan Boughton, Kyan Htoo, Aung Hein, and Ellen Payongayong – “Measuring Hope: A Quantitative Approach with Validation in Rural Myanmar” (working paper version here) is now officially forthcoming in the Journal of Development Studies. Here is the abstract:

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Myanmar Days [Part 3]

I’m back in Myanmar putting the final touches on a household survey on the economics of hope (and this is this blog’s third installment of “Myanmar Days” – parts 1 and 2 here and here).

These days my work is filled with pre-testing and revising, and repeating. Every day. It is challenging and tedious but also entertaining and fun.

One of the key tasks is correctly translating the survey from English into Burmese (technically it’s ‘Myanmar language’, but that’s hard to say). This process, as you many imagine, is quite involved. We spent quite a bit of time the other day thinking about the difference between these two statements: “I am energetically pursuing my goals” and “I am meeting the goals I have set for myself”. After carefully translating the English survey into Burmese the survey is then translated back into English. This allows us to identify instances where the translation is not quite right.

Following this, we go out to local villages and pre-test the survey. This allows us to identify where questions and statements in the survey need to be worded better so that respondents can best understand what our enumerators are asking.

We have received many very interesting reactions to our questions as this survey is a bit unorthodox (as household surveys in developing countries go).

One question in our survey asks how much land does [the respondent] want to own. One older man did not want to answer this question because, as he said, such things are only for children to think about. At risk of reading too far into this statement, I am going to read into this statement.

Perhaps he is saying, as an adult we have to be realistic about our dreams. It is nearly impossible for me to achieve much more land than I currently own (he currently only owned the land on which his house sits). Part of the literature on aspirations in developing countries supports the idea that the experience of living in poverty squelches and prohibits the formation of aspirations (goals and dreams). Perhaps, this is what this man is saying: When I was a child I had dreams of owning lots of land, but now that I’m an adult (who is living amidst life-stealing poverty) I know what is actually possible for people like me and owning more land is simply not achievable. The hope of owning more land is child’s-play.  I’m not certain I have it 100% correct but somewhere in his short answer there is a profound lesson about the reality (and tragedy) of living a life in poverty.

Another man launched into a story: “My life is like that of a gardener”, he said. “I plant many fruits and vegetables but reap almost nothing because pests have destroyed my crop.” (He later made clear, pests were the government.) Another part of hope theory, as developed by social psychologists, is that hope includes a certain amount of personal agency – the belief in ones ability to succeed and accomplish the goals one has set for him or herself. Again, I’ll risk reading too far into this statement: It sounds like this man is stating that no matter how hard he works, his future outcomes are ultimately determined by the “pests” in his life.

Social psychology has developed an idea of “locus of control”. People can be characterized as having either an internal or external locus of control. Meaning, control over the future is within oneself or outside oneself. An external locus of control is thought to be correlated with feelings of hopelessness and leads to low levels of effort in investments or other (so-called) “rational behaviors”. Our survey is focusing on the three ingredients of hope: aspirations, agency, and avenues with validation checks by also asking about the closely related topics of self-efficacy and locus of control. It’s exciting, sobering, sweaty, dusty, challenging, and fun work. Stay tuned for more on this topic.

The pre-test team was invited for a snack at the town-level government office in Paung.

The pre-test team was invited for a snack at the town-level government office in Paung. (Yeah, I’m eating ice cream.)

Measuring Hope: Lessons from Rural Myanmar [Post-Op Notes]

For those who don’t know, a great new blog about applied development economics was launched last academic year. Managed by some folks over in Cornell’s Dyson School of Applied Economics and Management the “Economics That Really Matters” blog references Theodore Schultz’s 1979 Nobel Lecture when he said the following:

Most of the people in the world are poor, so if we knew the economics of being poor, we would know much of the economics that really matters. Most of the world’s poor people earn their living from agriculture, so if we knew the economics of agriculture, we would know much of the economics of being poor.

I like this quote by Dr. Schultz and I love this new blog.

The blog is typically reserved for graduate students in Cornell’s Applied Economics program (more accurately the folks who make up Chris Barrett’s research group), but this summer the blog was opened up for graduate students from outside of Cornell to write about their research. I took them up on the offer and yesterday they published a piece in which I talk about my recent trip to Myanmar trying to study the economics of hope.

Here’s the article:

As behavioral economics has become the mainstream of economic science, there has been a growing recognition that economic behavior is often influenced by historical experience, social observation, and individual aspirations. A recent demonstration of this can be found in a widely discussed article published last May in Science. Banerjee et al. (2015) speculate about the specific mechanisms driving the results of their evaluation of a multi-dimensional program aiming to ‘graduate’ participants from poverty, saying:

Perhaps this program worked by making beneficiaries feel that they mattered, that the rest of society cared about them, that with this initial help they now had some control over their future well-being, and therefore, the future could become better. (p. 14)

Several other studies have aimed to measure the formation of aspirations in India,Pakistan, Ethiopia, Indonesia, Kenya, and Peru. They all demonstrate something fundamental about human behavior, particularly when surrounded by life-stealing poverty.

Psychologists (see Snyder, 2002 for a summary) say hope is comprised of three elements: aspirations (or some specific goal), avenues (or a visualized pathway toward aspired outcomes), and agency (or a feeling one can attain aspired outcomes). In aworking paper, Travis Lybbert and Bruce Wydick (2015) draw a distinction between wishful hope, which they call “Hope 1,” and aspirational hope, which they call “Hope 2,” Of primary interest to development economists then is “Hope 2,” as aspirations without sufficient agency or avenues could become wishful and relatively inconsequential in economic decision making.

I’ve been part of a team of researchers trying to contextualize this research to Myanmar. The Myanmar Development Resource Institute (MDRI) is a think-tank established to provide independent policy analysis and research related to economic reform, poverty reduction, and improved governance. Michigan State University’s Food Security Groupand IFPRI have partnered with MDRI to provide technical support on an agricultural and livelihood household survey of Mon State (a coastal region close to Thailand in Southern Myanmar).

[READ MORE OF THIS ARTICLE]

Scarcity, Hope, and the Psychology of Poverty

A psychologist walked around a room while teaching stress management to an audience. As she raised a glass of water, everyone expected they’d be asked the “half empty or half full” question. Instead, with a smile on her face, she inquired: “How heavy is this glass of water?”

Answers called out ranged from 8 oz. to 20 oz.

She replied, “The absolute weight doesn’t matter. It depends on how long I hold it. If I hold it for a minute, it’s not a problem. If I hold it for an hour, I’ll have an ache in my arm. If I hold it for a day, my arm will feel numb and paralyzed. In each case, the weight of the glass doesn’t change, but the longer I hold it, the heavier it becomes.”

She continued, “The stresses and worries in life are like that glass of water. Think about them for a while and nothing happens. Think about them a bit longer and they begin to hurt. And if you think about them all day long, you will feel paralyzed – incapable of doing anything.”

Remember to put the glass down.

This is good advice for many people. For many of us, the stresses and worries in life are similar to a glass of water. We can put glass-of-waterthe glass down when we need a break. We can take vacations from work, relax during and ‘evening in’, and forget about whatever is stressing or worrying us for a little while. This sort of behavior is healthy for us to practice and provides us with the rest we need to succeed in life.

For other people, however, ‘putting the glass down’ may not be possible. For some, it may be practically impossible to take a break or a vacation from the stresses and worries in their life. These people are the global poor all over the world. The people who, in local currency equivalents, consume less than $2 per day – that includes every major dimension of consumption: food, housing, education, health, security, transportation, etc.

This is the broad point of Sendhil Mullainathan and Eldar Shafir’s book Scarcity: Why Having So Little Means So Much. Sendhil (a behavioral economist at Harvard) and Eldar (a psychologist at Princeton) demonstrate through lab and field experiments how the mind is taxed by stresses and worries in our life. When humans are busy, or sleep deprived, or poor we focus extra mental “bandwidth” toward whatever is stressing us. This allows us to do amazing things on a deadline or despite a lack of sleep but it takes attention away from other important aspects of life as our minds only have so much bandwidth. The kicker is the busy and the sleep deprived can take a vacation or sleep in on a Saturday morning; the poor however, can’t take a vacation from their poverty. They can’t put the glass down.

This is an important understanding in itself, but there is increasing evidence that there is an added (perhaps secondary) effect of poverty on human cognition.

Although is is not a standard view in economics, many development economists are coming to the understanding that individual desires and economic behavior are often influenced by historical experience and social observation. Rather than existing in isolation, so-called consumer preferences are conditioned by memorable experiences or are formed by comparison with others. In this vein, for many of the poor around the world the environment in which they life (i.e. multi-generational life-stealing poverty) may influence their behavior specifically as it concerns decisions to invest in the future.

In short, the most devastating aspect of global poverty may the critical lack of aspirations, or more broadly hope in the future.

There is a growing literature on the economics of hope (see herehere, here, and here). This literature can be briefly summarized in the conclusion of an important series of lectures given in 2012 by Esther Duflo, an economist at MIT:

A little bit of hope and some reassurance that an individual’s objectives are within reach can act as a powerful incentive. On the contrary, hopelessness, pessimism, and stress put tremendous pressure both on the will to try something, and on the resources available to do so.

I am currently in Myanmar (a place where George Orwell’s grandmother lived and where he himself spent several years working for the Imperial Police). I am here working to implement a field experiment to measure the psychological and economic effects of hope. The study is still in preliminary stages and I’ve spent the last several days in open ended interviews with small-holder farmers and landless villagers in the rural areas of Mon State.

Myanmar is unique and fascinating place to study the formation of hope at the present time. In 2011 democratic elections led to political and economic reforms. While opportunity abounds in many places as prices of important goods and services (i.e. vehicles, electricity, 3G mobile connectivity, health care, ect.) become more affordable due to the opening of the country to global trade, some areas of the country are still constrained and lack access to this opportunity.

I met with a family yesterday that expresses these challenges all too well. The family is Christian in a country and village that is predominately Buddhist. They live on the grounds of their local church for free and, in return, maintain the church property. They own no land and rent no land. Both the mother and father are day laborers and both are currently unable to find work. The mother forages in the forest for bamboo shoots and mushrooms. They have six children, two of which have migrated to Thailand to find work. None of their children have completed formal education and the chances aren’t great for the younger children, according to the father.

When I asked when the last time the family was happy the father responded, “When we are able to have a good meal”. When I asked how often that happened, he responded, “About twice a week”.

I asked what would make their family happy in the future, the father responded, “Last year the church gave each family $100, we’d be happy if that happened again”.

Psychologists say hope is comprised of three elements: goals, agency, and pathways. This family, at least anecdotally, lacks each of these elements. Their aspirations for the future are low and their goals rely heavily on other people.

George Orwell once wrote, “Within certain limits the less money you have the less you worry”. As I sit in the setting of his classics Burmese Days and Shooting an Elephant I have come to realize, he was wrong. The global poor are subject to incredible levels of stress: diseases, expectantly for children, are more likely to be life-threatening; crop failure can lead to starvation. And as shown by the work of Sendhil and Eldar stress makes good decision-making harder.

Perhaps most importantly, the poor lack the institutional environment which fosters good decisions. People, everywhere, underestimate the benefits of education, struggle to save their income, and spend on health care. In rich countries, however, kids going to school is a common social norm; direct deposit and pension systems make personal finance and saving for retirement something many don’t even think about most days; clean and drinkable water comes out of every tap and childhood immunization appointments are automatically set up. Poor countries provide few such prompts and many poor people around the world don’t experience these luxuries.

David Brooks (I know, I know. He’s a polarizing figure) recently wrote: “The world is waiting for a thinker who can describe poverty through the lens of social psychology”. I think the wait is over, the thinkers are here. It’s the folks working on the economics of hope and the psychology of poverty.

 

The Economics of Hope

Two years ago I was a senior in college and sitting in a professor’s office discussing several topics I could focus on for a senior thesis. At the time the economics of happiness was gaining a lot of momentum as a research topic. I asked my professor if I could think about the concept of hope from an economic perspective. We did some searching for relevant literature and didn’t really find much. I moved on to a different topic.

Fast forward to now. The economics of hope has a growing and promising literature. I have plans to travel to Myanmar to try and collect data to better understand this topic. As I begin to dig into the literature, I thought it would be nice to record a roadmap of sorts.

Two summary resources provide a great starting point, and much of the insights in this blog post:

What does hope have to do with economics?

At first it may seem like there is not much connecting a light and fluffy topic like hope with cold and calculating economics. Generally economists have a lot to say about a lot of things. But hope is a topic that has historically belonged to theologians, philosophers, poets, and signer-song-writers. At second thought, however, hope is fundamental to any economic activity. Consider the words of Martin Luther:

Everything that is done in the world is done by hope. No husbandman would sow one grain of corn, if he hoped not it would grow up and become seed; no bachelor would marry a wife, if he hoped not to have children; no merchant or tradesman would set himself to work, if he did not hope to reap benefit thereby. How much more, then, does hope urge us on to everlasting life and salvation?

And John Stuart Mill:

A hopeful disposition gives a spur to the faculties and keeps all the working energies in good working order.

What we talk about when we talk about hope

There are a couple ways the word hope is used in english language and the difference between the two is subtle. Consider the difference between two sentences: “I hope it is sunny tomorrow.” and “I hope to go for a run tomorrow.” Both use the term hope but in different ways. Both terms indicate some sort of uncertainty but the second usage implies human agency. I may hope it is sunny tomorrow, but there is nothing I can do to make it sunny. I also may hope to go for a run tomorrow and I certainly can do things to make that happen. Lybbert and Wydick create a helpful figure to represent the differences between “Hope 1”, “Hope 2”, “Hopeless 1”, and “Hopeless 2”.

Screen shot 2015-04-10 at 8.56.51 PMHopelessness 1 is experienced by someone with both low agency over the future and low optimism about the future. This is a person who is feeling both hopeless and helpless. For example a victim of a famine who has no food availability in the future and no way to get it either. Hopelessness 2 is experienced by someone with high agency over the future but low optimism about the future. This is a person who is feeling hopeless but not helpless. For example someone who works very hard to survive but doesn’t see a future of any other way of life. Hope 1 is experienced by someone with low agency over the future but high optimism about the future. This is someone who hopes it will be sunny tomorrow. Hope 2 is experience by someone with both high agency over the future and high optimism about the future. This is someone who hopes to go for a run tomorrow.

As Lybbert and Wydick explain:

Distinguishing between these types of hope is useful, but individuals often experience hope as a combination of Hope 1 and Hope 2. Both types of hope, for example, are manifest in the case of a famine victim, or someone who is trapped, lost, or stranded, where a person may have to take painful but proactive steps to survive (internal agency) while awaiting relief or rescue (external to agency). Consider similarly the plight of someone suffering from a potentially terminal disease, in which there is some probability that a breakthrough in treating the disease may occur in the future. Survival thus depends on two events: (i) that the breakthrough occurs by time t; and (ii) that the patient is able to survive until time t. Hope for the patient thus consists of Hope 1 (hope that the breakthrough will occur) and Hope 2 (hoping to remain as healthy as is possible until the breakthrough arrives), which implies some degree of agency that may involve costs. (We might call this type of hope “Hope 1.5.”) In contrast, a person beset by hopelessness has concluded that the joint probability of these events is sufficiently dwarfed by the agency costs of survival, ensuring the unfortunate outcome.

 

Hope seems to matter (some evidence) 

Abhijit Banerjee, Esther Duflo, Raghabendra Chattopadhyay, and Jeremy Shapiro have a (2011) working paper entitled Targeting the Hard-Core Poor: An Impact Assessment. In it they evaluate a program designed to provide development services to people who don’t (for whatever reason) take up microfinance when it is offered to them. The program transferred assets (cow, goat, chickens) worth about $100 to the ultra-poor in Murshidabad, India. The results of the program were huge! 21% increase in earned income. 15% increase in consumption. An hour more work per day. Large psychological health effects. These effects are surprising given the amount of the asset transfer. What could be happening? Why are the benefits of giving an extremely poor person in India $100 WAY more than $100? What is making this return so large? Several things could be happening:

Perhaps the asset freed up a “nutrition based poverty trap”. In such a trap wages are so low that by working all day an you would only make, say, 800 calories, far lower than the necessary 1200, or so, calories needed per day. In this type of situation you will not be able to work or work very little and you will be very unproductive and stay very poor. So perhaps an asset transfer allows you to earn a small return on the asset (i.e. the cow gives milk, the chickens lay eggs etc.) and this pushes you above the necessary 1200 calories per day. Now the return on a $100 asset transfer is magnified by the workings of the labor market that you are now able to take advantage of because you are now able to put in a full day of work. Even if the labor market wages are still very low the return from the ultra-poor asset transfer will be quite large.

This nutrition based poverty trap isn’t what seems to be happening in Murshidabad. If the people were so poor that they didn’t have enough food to eat to work for enough hours every day then by giving an asset (such as a cow), all of the extra consumption should be in the form of food. Because feeding yourself adequately is the most productive thing to do. But in this impact assessment the authors find similar increases in overall consumption (15%) and food consumption (17%). People seem to be increasing expenditures in everything, not just food. Moreover, within food consumption the ultra-poor seem to be substituting for higher priced food that is not necessarily the most calories. For example less grains, more meat. Basically if these people were starving they would have maximized the calories available with their resources.

Another possibility is a so-called “credit trap”. In other words the ultra-poor do not have the ability to gain credit (due to a lack of durable assets to use as collateral, or lack of access to a provider, etc.). This again doesn’t seem to be the case because the program in Murshidabad, India was implemented by a microcredit organization explicitly targeting these people because they couldn’t get them to borrow money. So there was a organization in the area providing credit without a restriction of having collateral.

Still another possibility is mental health or psychological health. The beneficiaries of the program recognized fewer symptoms of depression, fewer symptoms of stress, and feeling much happier. This perhaps (as hypothesized by Duflo) could be the mechanism that leads to the large returns on the $100 asset transfer to the ultra poor. The question is whether there is such thing as a “hopelessness trap” (or as Dalton, Ghosal, and Mani (2013) call an “aspirations failure”). Said differently the expectation of future poverty exacerbates current poverty.

Take for example a seamstress. There is a huge difference between the productivity between sewing by hand and having a sewing machine. Additionally there is a big difference between having a mechanical sewing machine and a manual sewing machine. Additionally, there is a difference between having one mechanical sewing machine and two mechanical sewing machines. And so on and so on. In economist speak, the production function for a seamstress has discrete steps. An investment has a threshold before it becomes profitable. The problem is you can’t buy one tenth of a machine. You have to buy the whole thing. If someone is so poor and “hopeless” that they think they will never be able to cross the critical threshold for profitability, there is little incentive to be as productive and rational as possible. Perhaps you should spend more time buying toys for your child rather than save for a sewing machine if you never think you’ll be able to save enough for a sewing machine.

Hope then is a capability (a la Amartya Sen). Hope is a fuel that makes us capable of achieving things. And it also provides motivation to invest in business, education, health, etc.

So, how do we make people hopeful?

There could be many ways, several that have been recorded in the literature so far include:

For a long time those working in development have been focusing on external constraints to economic outcomes. We always think of the obvious things like credit, or agricultural inputs, or business skills training, or health, or nutrition, etc. Perhaps it is time to think about the internal constraints to economic outcomes. Things like aspirations, beliefs, or attitudes. All things that make up what we call hope.

(There is also a theological perspective of all this. Undoubtably, there will be more on that later.)