Aspirations Adaptation among the Poor (nominated to the Juan Luis Londoño Prize to best paper on social issues by a young researcher)

How sustainable are the aspirations of the poor? We rely on a large-scale and multi-country field experiment to test the effect that a sharp "in situ" housing intervention to slum dwellers in El Salvador, Mexico, and Uruguay... [ view full abstract ]

How sustainable are the aspirations of the poor? We rely on a large-scale and multi-country field experiment to test the effect that a sharp "in situ" housing intervention to slum dwellers in El Salvador, Mexico, and Uruguay has on the housing aspirations of non-beneficiary neighbors, those who have not yet satisfied their basic housing needs. After sixteen months of treatment exposure, we find that controls' housing quality is significantly lower compared to the treatment group, and no other noticeable material gaps across groups are observed. Accordingly, aspirations to upgrade within the slum are significantly higher among control units compared to the treatment group, suggesting that
the housing gap was internalized by non-beneficiary households who now aspire to "keep-up" with their treatment Joneses'. However, after eight additional months (from months 16 to 24) the aspirational difference totally vanished, being this fully explained by adaption in the control group as treatment's housing aspirations remain constant over time. The evidence is consistent across the three country experiments as well as for different measures of aspirations, rendering credibility to the external and construct validity of the results.