Towards a theory of behavioral poverty traps

Dasgupta, Dyotona and Saha, Anuradha (2022) Towards a theory of behavioral poverty traps. Discussion Paper. Ashoka University, Haryana.

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In a dynamic setting, we build a theoretical model to capture the macroeconomic implications of parental biases on poverty traps and income inequality. Less privileged parents have biased perceptions about ‘self-efficacy’. Perceived self-efficacy is shaped by socio-economic backgrounds. We find that biases increase the extent of poverty trap. Without any biases, there exists a poverty trap only when the parental warm glow is low. With biases, there emerges a poverty trap even for moderate warm glow. For high parental warm glow, there may exist a poverty trap. Income inequality in presence of biased parents is always (weakly) higher.

Item Type: Monograph (Discussion Paper)
Keywords: Perceived self-efficacy | Behavioral Bias | Human Capital Investment | Poverty Trap
Subjects: Social Sciences and humanities > Business, Management and Accounting > Strategy and Management
Social Sciences and humanities > Economics, Econometrics and Finance > Economics
Social Sciences and humanities > Psychology > Social Psychology
Social Sciences and humanities > Social Sciences > Behavioral Studies
JGU School/Centre: Jindal Global Business School
Depositing User: Arjun Dinesh
Date Deposited: 03 May 2022 18:09
Last Modified: 23 Jun 2022 03:56


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