Understanding the Determinants of Aspirations in Rural Tanzania: Does Financial Literacy Matter?

Mequanint Melesse, Amos Nyangira Tirra, Yabibal Walle and Michael Hauser
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Amos Nyangira Tirra: The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT)
Michael Hauser: The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT)

The European Journal of Development Research, 2023, vol. 35, issue 6, No 2, 1294-1321

Abstract: Abstract Aspirations have recently received increased attention in the analysis of poverty and its dynamics. The argument is that aspirations provide reference points for individuals’ forward-looking decisions and behaviours. Understanding of what determines aspirations is vitally important to design development interventions that can raise aspirations. In this paper, we analyse whether financial literacy is associated with individuals’ aspirations. Using data from more than 2000 Tanzanian households, we find a robust positive correlation between financial literacy and aspirations. Our results are robust to using alternative financial literacy measure, controlling for extensive covariates and non-cognitive traits, and sensitivity analyses to omitted variables. Overall, our findings suggest that aspirations could be influenced to improve poor individuals’ future investments and forward-looking behaviour.

Keywords: Aspiration; Financial literacy; Poverty; Non-cognitive trait; Tanzania (search for similar items in EconPapers)
JEL-codes: C26 C83 D91 G53 O12 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1057/s41287-023-00582-0

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