Research on Anti-Poverty in Behavioral Economics Zhan-bing HUANG 1,a and Ying LIU 1,b,*

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1 2017 3rd International Conference on E-commerce and Contemporary Economic Development (ECED 2017) ISBN: Research on Anti-Poverty in Behavioral Economics Zhan-bing HUANG 1,a and Ying LIU 1,b,* 1 International Business School, Shaanxi Normal University, Xi an , P. R. China a hzb10@163.com, b @163.com *Corresponding author Key words: Poverty; Behavioral Economics; Reference Point; CAVE. Abstract. Nowadays, poverty is still a prominent problem in economic and social development in China. For a long time, scholars have mainly solved the problem of poverty from the perspective of standard economics, which focuses on material giving, yet neglects changing the mind of the poor. At present, the poverty alleviation is not only with high cost, but the effect is not sustainable in China. In a word, it can t solve the problem of poverty in nature. Dealing with the problem of poverty from the perspective of Behavioral Economics, which emphasizes that helping the poor to change the mind should be put in the first place to achieve the effective change in the behavior and long-term concept of the poor. Using CAVE method to analyze the anti-poverty experience of the villagers living in 18-hole village in Huayuan County of Hunan Province, we can change the poor s mind by transferring their reference points under the prospect thoery to help the poverty alleviation. This study will provide a new approach to the promotion of poverty alleviation based on behavioral economics in China. Introduction Poverty has always been an inevitable problem in the development of human society, there are 200 million people living under the poverty line. The situation of poverty is grim, so anti-poverty is a serious task to Chinese government. Standard economics has analyzed the causes of poverty from the perspective of lack of resources, while ignoring the impact of psychological or social factors on individuals. The results of poverty alleviation doesn't seem very satisfying, as Professor Francois Perraux (1987) said: "If the analysis or new developmental research cannot focus on people's minds, then this analysis would be superficial, and it is difficult to achieve the purpose. In view of these shortcomings of anti-poverty under the standard economics, CAVE (content analysis of verbatim explanation) is used to solve the anti-poverty problem based on the analysis of behavioral economics. By measuring the psychological changes of the poor, we can transfer the reference point of the poor and realize the effective transformation of the poor s thought and behavior to help the poverty alleviation and provide a new thinking for the work of poverty alleviation in China. The perspective of this paper is novel and the method used is not only at a low cost, but also the effect is significant, with a strong feasibility, a high research value and a very broad prospect in China. Literature Review In the existing literature, there have been a lot of scholars studying on poverty and anti-poverty. They have studied the problem of poverty from the perspective of standard economics, focusing on income, necessities, abilities, rights or opportunities and so on. Although the research from the above-mentioned perspectives has provided some help to the change of poverty in China, the effect of anti-poverty is not remarkable. Some sortings from the traditional perspective of the standard economics are as flows: 307

2 Table 1. Theoretical Perspectives on Poverty under Traditional Standard Economics. Perspective Author Ideas and views Measures Existing problems Income necessity capability Yujiro Hayami(1953) Nelson (1956) Myrdal(1957) Adam Smith(1776) Amartya Sen(1992) Lacking products and resources leads to insufficient income. Low-level equilibrium trap The Dilemma of Low Income and Low Output. Lack of essential necessities to sustain life. Lack of basic capacities and rights leads to poverty Develop the economy and raise incomes Improve the social security Empowering the poor to improve abilities. Unbalanced economic development and inequality in income The relief only reduce poverty temporarily, unsustainable. Further understanding of poverty, but limited. The domestic point of view Lin yifu (2002) argues that reducing the rural labor force to increase production and income. Cao Hongmin (1997) material supply can not meet the basic survival needs. Feng huangxia et al. (2015) poverty is lacking basic ability. Traditional economics is based on the rational person hypothesis. But it ignored the impact of psychological and social impacts on humans behavior, so the measures to solve the problem of poverty from the perspective of standard economics can only temporarily alleviate the poverty in a short time, but it can t last long and effectively solve the problem of poverty. And behavioral economics based on the perspective of "bounded rationality" think that people are irrational it considers the root of poverty from the perspective of human s psychology, poverty is essentially a kind of thinking predicament the poor are facing, the long-term poverty makes the poor 's mental thinking model solidify and lack a kind of heart force on thinking and the judgment, making it difficult to get rid of poverty. Therefore, studying the poverty in-depth can provide a new way to solve the problem. Viewpoints specification and the proposition of the hypothesis to be tested In this paper, the 18-hole villages, a poor village in Huayuan County, Hunan Province was selected as the object of empirical study mainly based on the following two considerations: On one hand, the influence of the accurate poverty alleviation story of the 18-hole village spreads all over the country. On the other hand, through a variety of reports, we can discern that many psychological and ideological changes take place between the 18-hole villagers before and after poverty alleviation, the transformation of positive and optimistic attitude of the villagers provides a new way of thinking and direction for the anti-poverty work in our country. In the light of this issue, the psychological and ideological changes help poverty alleviation, which is embodied by the following hypothese: changing the reference point, the psychological changes of the poor are different before and after poverty alleviation, the state of poverty is improved. The Introduction of the Method of CAVE In order to get a better insight into the poor s mental attitude towards anti-poverty, we will introduce a method of measuring the psychology of the poor CAVE (content analysis of verbatim explanation). The method of CAVE, firstly applied to psychology, was proposed by Peterson, 308

3 Lubbersky and Seligman (Peterson, Luborsky, Seligman) in 1983 and later applied to sociology, behavioral science, economics, nutrition and other fields. This kind of content analysis technology, based on verbatim interpretation, is designed to encode some written samples (written or spoken) to assess whether an individual can be causally attributable for measuring the subjects explanatory style. It mainly consists of two main steps: Firstly, we study the attribution style by making an analysis of th reason in speech, statements, journal entries and other written materials, from which we extract the causes of positive and negative events. And then marking the level of the three causal dimensions internal vs external, stable vs unstable, and global vs specific causes, coding the scores to judge which attribution style or explanation form it belongs to. According to Peterson, Seligman and others explained the attribution style in the "attribution style questionnaire" in 1982, attribution style includes two kinds: positive attribution style and negative Attribution style (some scholars also call it the optimistic attribution style and pessimistic attribution style). Positive attribution attributes bad things to external, temporary, and specific causes, attributing good things to intrinsic, permanent, and general causes; and the negative attributional styles is the opposite. Data Sources and Descriptive Statistics The data tested in this paper are from collected materials which are graded by the method of CAVE. Specific practices are as follows: select the written materials collected from many well-known medias such as CCTV news network focusing on the reports of 18-hole village story of anti-poverty, Hunan TV news network, Red Net, Huasheng Online, Sohu that reflect people's psychological changes or attitude before and after poverty alleviation to analyze the attribution of the poor in accordance with the 1-7 subscale to score through the following three dimensions: stability, globality and internality. Because of the need of the study, in the process of the basic data processing, 1 on behalf of statement that reflects people s mind or attitude before poverty alleviation, 2 on behalf of statement that reflects people s mind or attitude after poverty alleviation. The specific descriptive analysis is as follows: internality stability globality N averag e Table 2. Descriptive statistics. standard deviation 95%confidence standard interval of the mean minimu error lower upper m maximum limit limit totality totality totality The descriptive analysis are from the specific score of the three dimensions: as we can see from the Table 2, no matter from which dimension of the internality, stability or globality before and after the poverty alleviation, there are significant differences in the mean score. The psychology of the poor has changed obviously before and after the poverty alleviation, and the poor have a positive and optimistic attitude towards the poverty alleviation. 309

754 respectively, indicating that the scale has a better reliability in this study. It also shows that the reliability of attribution from these three dimensions is better.

4 Results of Hypotheses Testing The reliability test In this paper, we use SPSS2.0 to test the reliability of the data. The Cronbach α coefficients of the three dimensions obtained by statistical tests are: internality 0.941, stability0.868 and globality respectively, indicating that the scale has a better reliability in this study. It also shows that the reliability of attribution from these three dimensions is better. The correlation test We select four different objects to attribute and score the sentences which reflect the psychological changes of the poor. These four objects are all professionally trained for a week about how to use the method of CAVE to analyze and attribute the language reflecting their psychological changes of the poor from these three dimensions of the internality, stability, globality, and then scoring according to 1-7 levels. We performed the correlation test on the scores of four different scoring subjects and found the results: in terms of internality, stability, or globality, the correlation coefficients of the four different objects are high, and it can be seen that the scores of the four objects are significantly correlated with each other at the 0.01 level, which also ensures the consistency and validity of the scoring data. In summary, scores between the four selected scoring subjects were significantly correlated, as they are when subjects rate their own attributions (Seligman et al., 1979).Thus, to avoid redundancies in subsequent analyses, next, we will choose the average score of these four objects scoring on the three dimensions to do the statistical test. Mean analysis Figure 1. The average score of the three dimensions before and after the poverty alleviation. It can be seen from the mean diagram that there are significant differences in the psychological changes of the poor before and after poverty alleviation. Significance Test- One-Way ANOVA Table 3. One way analysis of variance. internality stability sum of squares df mean square F significance Between-group Inter-group totality Between-group Inter-group totality

5 Between-group globality Inter-group totality Note: Value in parentheses is the standard deviation p < 0.01 In the paper, the average of the four scoring objects is analyzed by one-way ANOVA. The results show that all these three dimensions reject the null hypothesis, that is, there exists significant differences and the effect is significant before and after poverty alleviation: from the dimension of internality, F = 9.289, P <0.01; from the dimension of stability F = , P <0.01;from the dimension of globality, F = 5.992, P <0.05, it shows that there are significant differences in the psychological changes of the poverty-stricken subjects before and after the poverty alleviation, and the psychological changes affects the poverty alleviation significantly. In summary, there are significant differences in the psychological changes of poverty-stricken subjects before and after poverty alleviation. It turns from the pessimistic before the poverty alleviation to the positive optimism after poverty alleviation. The positive and optimistic transformation of the mind will bring about a positive positive energy. We can take advantage of the influence of positive factors to induce the effective change in the mind of the poor, which will bring about the change of behavior. With full confidence and hope for poverty alleviation, firm faith in changing the state of poverty, all of which are turned into the power of action, can we achieve the real out of poverty. Conclusion Based on the CAVE data, this paper analyze the impact on the poor before and after poverty alleviation by analyzing and evaluating the language materials that reflect the psychological changes of the poor before and after poverty alleviation. The results of empirical analysis show that there are significant differences in the psychological changes of the poor before and after poverty alleviation. In the future, we should pay more attention to the anti-poverty policy under the guidance of behavioral economics, the effective transformation of the mind comes first, strengthening the mobilization of the positive factors impact, the transformation of the mind to promote the effective transformation of the poor s behavior, which helps poverty alleviation. What s more, spontaneous practice of applying the principles of behavioral economics to help poverty alleviation has achieved good results. It is worth further studying the problem of the anti-poverty from the perspective of behavioral economics. References [1] Wu Fucai, "Poverty" and "Economic Analysis of the analysis of poverty" [J], Economic Research, 2001 (4) [2] Takamizu Yasujiro, development economics - from poverty to wealth [M]. Beijing: Social Science Literature Publishing House, [3]Christopher Peterson, Lester Luborsky, Martin EP Seligman, Attributions and Depressive Moods Shifts: A Case Study Using the Symptom-Context Method, [J] (1983), Journal of Abnormal Psychology, Vol. 92, [4] Liu Yao, "Rural knowledge poverty and rural higher education" [J], Tsinghua University Education Research, 2002 (5). [5] Leandro S. Carvalho, Stephan Meier AND Stephanie W. Wang, Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday [J], American Economic Review 2016, 106 (2):

6 [6] Hu Angang, Li Chunbo. "New Poverty in the New Century: Knowledge Poverty" [J]. Chinese Social Science, 2001 (3): 70 ~ 81. [7] Lin Yifu, "To solve the problem of rural poverty needs a new strategic thinking - Comment on the World Bank's new" benefit the poor rural development strategy "[J], Peking University: Philosophy and Social Sciences, 2005 (5): 5-8 [8] Ye Puwan, "Poverty Economics Research: A Literature Review" [J], World Economy, 2005 (9). [9] Wang Wenlue, MAO Qianqian, Yu Jin. Redefinition of Poverty Based on the Perspective of Risk and Opportunity [J]. Journal of China Population, Resources and Environment, 2015, 12: [10] Feng Hexia, Wang Xiaolin, Xia Qingjie. Analysis of the Relationship between Income Poverty and Multidimensional Poverty [J], Labor Economics Research, 2015, 06: [11] Martin. Seligman, study optimism [M]. Beijing: Xinhua Publishing House, [12] Johannes Haushofer and Ernst Fehr, On the psychology of poverty [J], Science 344, 862 (2014). [13] Paul Anand, Stephen Lea, The psychology and behavioral economics of poverty [J], Journal of Economic Psychology 32 (2011) [14] Markus Jantti, Ravi Kanbur, Milla Nyyssola, Poverty and welfare measurement on the basis of prospect theory [J], The review of Income and Wealth Series 60, Number 1, March [15] Alan Carr, Zheng Xue et al., "Positive Psychology", China Light Industry Press, [16] Peter Schulman, Camilo Castellon and Martin E. P. Seligman, Assessing Explanatory Style: The Content Analysis of Verbatim Explanations and the Attributional Style Questionnaire, [J] (1989), Vol. 27, No. 5 pp [17] Bertrand, M., Mullainathan, S. & Shafir, E. (2004) A behavioral-economics view of poverty [J], American Economic Review, 94 (2), [18] Chakravarti, The psychology of consumption in poverty and development [D] (2006), Journal of Consumer Psychology, 16 (4), [19] Huang Wenping, Lu Xinbo. Poverty problem of economic explanation [J]. Shanghai Economic Research (8). [20] Liang Xin. Psychological Poverty in China since 1980 Summary [J]. Academic Exploration (4). 312

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