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Duflo reveals how hope can help break poverty trap

Oct 10 2013
Brian Berkey

Can providing the very poor with grounds for hope for a better life help break the “poverty trap” that so many of the world’s worst off people find themselves stuck in

In her talk “Hope, Aspirations, and the Design of the Fight Against Poverty,” Esther Duflo argues that it can.

She describes several reasons why the poor might neglect opportunities to improve their economic conditions, drawing on the results of a number of empirical studies. She goes on to suggest, on the basis of additional studies, that even relatively small improvements in these conditions can be enough to change their behavior patterns. Providing the poor with some reason to be hopeful, then, may help to break the cycle of poverty that seems to trap so many of them.

Duflo claims that many of the very poor may refrain from investing what little resources they have in their futures because they believe that such efforts are very unlikely to yield significant benefits. This belief (at least if it is true) can make it rational for people living in extreme poverty to repeatedly choose present consumption over things like the pursuit of education, which could potentially help them to escape poverty. These choices, however, ensure that they will remain poor. The lack of hope for a better life, then, seems to lead even rational agents to forego opportunities to improve their long-term economic prospects, and therefore to fall into a poverty trap. 

In addition, Duflo explains, poverty is correlated with factors that can interfere with rational decision-making capacities, such as depression and worry. And there is some evidence that stressful conditions, such as those associated with poverty, lead to an increase in cortisol production, which in turn leads to a reduced capacity for rational decision-making. So even those among the poor who genuinely have opportunities to improve their conditions may face psychological barriers to taking advantage of those opportunities that are ultimately caused by features of their present conditions. Specifically, their capacity to focus on opportunities to improve their conditions, and on the reasons for hope provided by these opportunities, may be undermined by the fact that their present conditions are so bad. This is another reason why the very poor may find themselves caught in an apparently inescapable poverty trap.

A final reason why the poor may fail to take steps that would increase their chances of escaping poverty, according to Duflo, is that they tend to spend less time thinking about the future than those whose prospects are generally brighter. In other words, because the poor face extremely difficult conditions that are unlikely to significantly improve, they may simply avoid reflecting on the ways that they can protect themselves from particularly serious dangers, and thereby leave themselves more vulnerable than they might have been. This may be a way to avoid the depression and worry that often accompanies severe poverty, but it also reduces the likelihood of taking steps to increase the odds of escaping poverty that might be available.

Despite the substantial economic and psychological obstacles facing the very poor, there is evidence, according to Duflo, that even rather minimal improvements in their circumstances can significantly increase the likelihood of breaking the poverty trap. For example, when an organization in West Bengal provided very poor people with a single asset (e.g. a cow or a sewing machine), along with a living stipend and regular guidance and training for a few weeks, an increase in consumption that exceeded the value of the asset was sustained over time, and the beneficiaries increased their overall income in ways that were not entirely traceable to the assets they initially received.

Because the poor face extremely difficult conditions that are unlikely to significantly improve, they may simply avoid reflecting on the ways that they can protect themselves from particularly serious dangers, and thereby leave themselves more vulnerable than they might have been. 

Duflo suggests that these results support the view that hope functions as a capability that allows people to reach their potential. On this view, the poverty trap that so many of the poor seem to be stuck in is explained, at least in large part, by the sense of hopelessness that they feel due to their circumstances. If this is correct, it suggests that policies that provide grounds for hope about the future may be able to help many overcome the poverty trap.

These policies should be designed to both protect the poor against the worst outcomes that they now tend to be in danger of enduring, and to orient them toward achievable and meaningful goals. The implementation of such policies would give them reasons to be hopeful that they now lack, and so may be able to play a significant role in breaking the poverty trap. Furthermore, the example of the program in West Bengal suggests that significant gains for the poor can be achieved at rather modest costs. The approach that Duflo suggests, then, has the potential to appeal even to those who tend to be skeptical about large-scale aid efforts. If her conclusions are correct, it may be possible to mobilize support for policies that have substantial poverty alleviation potential.

Brian Berkey is a postdoc teaching fellow at the Center for Ethics in Society. Berkey received his Ph.D in Philosophy from UC-Berkeley in 2012. Before coming to Stanford he was a Research Fellow at the University of Melbourne, and a Lecturer at UC-Berkeley. His dissertation concerns individual obligations of justice, in particular in non-ideal circumstances, as well as broader questions about the demandingness of morality.