Aspirations, drought, and the perception of weather: How are future goals affected by severe rainfall shocks?
Individuals’ aspirations are receiving more attention in development economics as their role in decision making, future expectations, and well-being are recognized. High aspirational targets set by ambitious individuals may contribute to economic improvements, while low aspirations targets may sustain conditions of poverty in a negative feedback loop. Despite the connections to productive behavior, factors that may contribute to or work against the formation of aspirations have seldom been identified outside of the experimental setting. Particularly, we seek to understand how droughts impact individual aspirations. This report also makes the important distinction between perceived, actual, and expected drought shocks, and identifies the various influences on goal-setting. Using data on 748 Zambian households, we show that perceived drought length increased aspirations. Perceiving an additional day of drought was associated with an increase of 0.232 and 0.212 standard deviations for livestock and asset aspirations, respectively. When using Climate Hazards Group InfaRed Precipitations with Station (CHIRPS) data, we see no effect on aspirations, suggesting that past perceptions – rather than the shocks themselves, which dictate household ambitions. Finally, when using the individual’s expectations of future drought exposure, aspirations are reduced. Households that expect more frequent droughts in the next decade reduced a partial aggregate of aspirations by 0.295 standard deviations. The different effects observed depend on the subjective or objective nature of our shocks, and the orientation towards the past or the future, highlighting the complexity of identifying factors that contribute to the formation or destruction of aspirations.
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign