Aspirations in Economics: A Review
Focus of the study
This study reviews the fast-growing literature on socially determined aspirations, and the implications of that literature for the study of goal-setting, interpersonal inequality, mobility and social conflict. The core theory builds on two fundamental principles: (a) aspirations can serve to inspire, but still higher aspirations can lead to frustration and resentment; and (b) aspirations are determined by an individual’s social environment. These two basic postulates can be transformed into a variety of applications. We plan to review the literature and some of these potential directions in an invited essay for the Annual Review of Economics.
Broader motivation for the research
The study of aspirations in economics has as its starting point the notion that an individual’s goals and preferences are fundamentally determined by that individual’s social environment. Specifically, the economic conditions of her environment lay down yardsticks that determines an individual’s evaluation of success and failure. In this sense, social identity is basic to the theory, and the arguments can be extended to situations in which such interactions occur across gender, ethnicity and class.
Our review incorporates three key areas:
- the literature on the effect of aspirations on both utility levels, and how this fits within the larger literature on relativism in happiness, and incentives;
- study of the formation of aspirations, which are affected by a number of factors, from an individual’s social connections to politicians and mass media; and
- exploration of some extensions of our model of aspirations to discuss two important development issues: fertility and conflict.
- Garance Genicot, Georgetown University
- Debraj Ray, New York University