Seminar

Salvatore di Falco (Université de Genève): Poverty and Self Esteem

Individual self-esteem levels were elicited in three rounds of panel data in the Nile Basin region of Ethiopia to determine whether droughts during the main growing season affect self-esteem levels of subsistence-level farmers. We find that negative rainfall shocks have a negative and significant effect on levels of self-esteem. Results are robust and consistent across different specifications. Moreover, we find that self-esteem is correlated with elicited risk preferences. These results emphasise the important role of economic adversity on psychological constructs. We also find that our self-esteem measure is strongly correlated with investment decisions at the farm level.