Economic satisfaction and locus of control: a preliminary study with Uruguayan data

• Martín Leites (Universidad de la República, Uruguay)
• Xavier Ramos (Universidad Autónoma de Barcelona, España)

This paper contributes new evidence about economic aspiration formation, exploring the role of reference groups and Locus of Control (LOC) on economic satisfaction. The concept of aspiration failure suggest that people reduce their economic aspiration becasue they believe that their destiny is pre-ordained and beyond their control. This ideas are studied with alternative measures for the reference income for Uruguayan three waves panel survey on “Multidimensional Well-being Trajectories in Childhood” (MWTC). Reference group represent the benchmarks to which individuals compare themselves and evaluate individual outcomes. We consider Rotter's Locus of Control (LOC), which allows us to explore how an individual's expectation about the connection between his personal characteristics and experienced outcomes affects economic satisfaction. Results confirm the relevance of reference group and LOC explaining economic aspiration. While higher internality and relative power lead to higher economic aspiration, fatalistic belief lead to aspiration failure. These results are consistent when we used a direct meassure of income aspiration. Our findings provide evidence on how a relatively unfavorable situation can result in a reduction in economic aspirations, which is consistent with the predictions of Ray (2006).