Raising aspirations for poor entrepreneurs may backfire - Yang

September 21, 2021 VoxDev

Can setting larger, more ambitious goals and financial self-help books aid poor entrepreneurs in decision-making? In a new study, Dean Yang, professor of economics and public policy, and Aakash Mohpal, a U-M PhD alum, found that the two variables increase saving goals, but didn't increase savings themselves. Further, the goal-setting and self-help books lead to less borrowing and less business investment. 

"Our results suggest reasons to be cautious about attempts to spur the poor to break out of poverty through setting higher aspirations. Our results show that such an approach may even backfire," the authors wrote. "Moreover, there is a risk that focusing on low aspirations may not address other causes of low incomes."