Aspiring to a better future: Can a simple psychological intervention reduce poverty?

Abstract

Do higher aspirations for the future motivate people living in poverty to make long-term investments? Do their aspirations increase when economic conditions improve? To answer these questions, we run a 415-village field experiment with 8,300 women living in poverty in rural Kenya. We design an 80-minute workshop to help people set higher aspirations and plan to achieve them. We cross-randomise this with large unconditional cash transfers. The workshop substantially raises aspirations, labour supply, investment, revenue, and living standards 17 months later, relative to a placebo workshop. Increases in aspirations are the most likely mechanism to explain the economic effects. Cash transfers also raise aspirations, which might help to explain why transfers increase labour supply and investment. We conclude that aspirations respond to both economic and psychological interventions, contribute to investment decisions and living standards, and are important considerations for development policy.