Carol Graham, Julia Ruiz Pozuelo

We use a novel survey of poor and near poor urban young adults in Peru to study the role of hope in individuals’ propensity to invest in the future. We explored the past predictors of aspirations and life satisfaction today, based on battery of questions about past experience, education and health status, relationships with parents and friends, as well as about negative shocks. We included questions on current and past life satisfaction, internal and external locus of control, self-esteem, discount rates, optimism, and education aspirations. We found remarkably high levels of resilience and education aspirations among our survey population. Eighty-eight percent of our young adults aspire to completing college or post-college education. In addition, most of the respondents in the high aspirations categories had experienced one or more negative shocks in the past. Respondents in the high aspirations categories are also far less likely to partake in risky behaviors, such as smoking or having unsafe sex. This provides additional evidence suggesting that individuals with high aspirations and/or hope for the future are more likely to invest in those futures as well as to avoid behaviors that are likely to jeopardize their futures. While we do not know how lasting that hope channel is, particularly in the face of future shocks or disappointments, we hope to answer that question in future research.

JEL Codes
I00: Health, Education, and Welfare: General
J24: Human Capital; Skills; Occupational Choice; Labor Productivity