Changing Households' Investments and Aspirations Through Social Interactions [electronic resource] : Evidence From A Randomized Transfer Program / Macours, Karen

By: Macours, KarenContributor(s): Macours, Karen | Vakis, RenosMaterial type: TextTextPublication details: Washington, D.C., The World Bank, 2009Description: 1 online resource (45 p.)Subject(s): Asset base | Beneficiaries | Capital investment | Cash transfer | Cash transfers | Debt Markets | Developing countries | Education | Finance and Financial Sector Development | Financial support | Housing and Human Habitats | Human capital | International Bank | Investment and Investment Climate | Investment behavior | Labor Policies | Liquidity | Liquidity constraints | Macroeconomics and Economic Growth | Market Access | Microcredit | Microfinance | Primary Education | Productive investment | Productive investments | Risk management | Safety net | Social Protections and Labor | Trust fundsAdditional physical formats: Macours, Karen.: Changing Households' Investments and Aspirations Through Social Interactions.Online resources: Click here to access online Abstract: Low aspirations can limit households' investments and contribute to sustained poverty. Vice versa, increased aspirations can lead to investment and upward mobility. Yet how aspirations are formed is not always well understood. This paper analyzes the role of social interactions in determining aspirations in the context of a program aimed at increasing households' investments. The causal effect of social interactions is identified through the randomized assignment of leaders and other beneficiaries to three different interventions within each treatment community. Social interactions are found to affect households' attitudes toward the future and to amplify program impacts on investments in human capital and productive activities. The empirical evidence indicates that communication with motivated and successful nearby leaders can lead to higher aspirations and corresponding investment behavior.
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Low aspirations can limit households' investments and contribute to sustained poverty. Vice versa, increased aspirations can lead to investment and upward mobility. Yet how aspirations are formed is not always well understood. This paper analyzes the role of social interactions in determining aspirations in the context of a program aimed at increasing households' investments. The causal effect of social interactions is identified through the randomized assignment of leaders and other beneficiaries to three different interventions within each treatment community. Social interactions are found to affect households' attitudes toward the future and to amplify program impacts on investments in human capital and productive activities. The empirical evidence indicates that communication with motivated and successful nearby leaders can lead to higher aspirations and corresponding investment behavior.

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