Working Paper: NBER ID: w24264
Authors: Sebastian Galiani; Paul J. Gertler; Raimundo Undurraga
Abstract: We use a multi-country field experiment that combines random variation at the treatment level with exogenous variation in the length of exposure to treatment to test the effect of a slum-housing intervention on the evolution of housing aspirations of untreated co-resident neighbors over time. Initially after treatment, we observe a huge control- treatment housing gap in favor of treated units. As a result, non-treated households' aspirations to upgrade their dwelling are significantly higher compared to the treatment group, suggesting that they aspire to “keep-up” with the treated Joneses', as in standard models of peer effects. However, eight months later, no effects are found on housing investments and the aspirational effect completely disappears. Estimates based on a structural model of aspiration adaptation show that the decay rate is 38% per month. Our evidence suggests that simply fostering higher aspirations may be insufficient to encourage forward-looking behavior among the poor.
Keywords: aspirations; housing; poverty; peer effects; resource constraints
JEL Codes: O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Untreated households' aspirations (D19) | Housing quality gap (R28) |
| Decay of aspirations (D84) | Forward-looking behavior (D84) |
| Aspirations (Y60) | Actual housing investments (R31) |
| Housing quality (R21) | Aspirations (Y60) |