Fatalism is considered pervasive, not least within many poor communities. This paper explores whether 'fatalistic' beliefs have implications for the attitudes and behaviour of poor rural households towards investment in the future. It first explores the idea of fatalism. Using survey data from rural Ethiopia, the authors find evidence of fatalistic beliefs among a substantial group of rural households, as well as indicators consistent with a small aspiration gap and low self-efficacy. Such beliefs consistently correlated with lower demand for credit, in terms of loan size, repayment horizon and productive purposes.
CSAE Economics Department, University of Oxford, Oxford, UK. CSAE WPS/2011-03, 24 pp.