Estimating the Demand for Entrepreneurship Programs: Experimental Evidence from Jamaica.

Last registered on November 09, 2023
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Pre-Trial

Trial Information

General Information

Title
Estimating the Demand for Entrepreneurship Programs: Experimental Evidence from Jamaica.
RCT ID
AEARCTR-0002130
Initial registration date
March 24, 2017

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
March 26, 2017, 11:34 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
November 09, 2023, 10:46 AM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
Jamaica
Region

Primary Investigator

Name
DIEGO UBFAL
Affiliation
World Bank
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Other Primary Investigator(s)

PI Name
David McKenzie
PI Affiliation
Development Research Group, World Bank
Contact Investigator
PI Name
Alessandro Maffioli
PI Affiliation
Inter-American Investment Corporation
Contact Investigator

Additional Trial Information

Status
Completed
Start date
2017-04-15
End date
2019-08-01
Keywords
Education, Labor
Additional Keywords
Entrepreneurship, Business Training, Willingness to Pay
JEL code(s)
D12, I26, J24, L25, O12
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
The goal of this project is to understand whether it is possible and desirable to charge a positive price for business-training programs. We elicit willingness to pay for a course for entrepreneurs in Jamaica. First, we estimate the demand schedule for the program. Second, we study whether willingness to pay can act as a screening device to select those entrepreneurs who would benefit the most from participation in training programs. Third, we test whether there is a sunk-cost effect by which those who pay a higher price for the program exercise more effort (attend the training more regularly) and achieve higher returns. This project is relevant to understand whether we can increase the effect of business-training programs by targeting, and whether providers can achieve financial sustainability by charging a positive price without screening out a large share of entrepreneurs who might participate only if the program is offered for free.
External Link(s)

Registration Citation

Citation
UBFAL, DIEGO, Alessandro Maffioli and David McKenzie. 2023. "Estimating the Demand for Entrepreneurship Programs: Experimental Evidence from Jamaica.." AEA RCT Registry. November 09. https://doi.org/10.1257/rct.2130-7.0
Former Citation
UBFAL, DIEGO, Alessandro Maffioli and David McKenzie. 2023. "Estimating the Demand for Entrepreneurship Programs: Experimental Evidence from Jamaica.." AEA RCT Registry. November 09. https://www.socialscienceregistry.org/trials/2130/history/200623
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Our intervention is based on two parts: (i) experiments with entrepreneurs to elicit their willingness to pay for an entrepreneurship program, and (ii) implementation of the training for the entrepreneurs with WTP higher than the randomly drawn price.
Intervention Start Date
2017-11-01
Intervention End Date
2018-07-31

Primary Outcomes

Primary Outcomes (end points)
Willingness to Pay, Attendance to the Course, Business Practices, Soft Skills and Business Outcomes.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The design is based on eliciting willingness to pay for the training program using multiple price lists, similar to a discrete version of the Becker-DeGroot-Marschak mechanism (BDM). Participants in our study will be given information about the program in a demonstration class. We will then ask them whether they are willing to pay $X for the entrepreneurship program, where X takes several different values (X=0 in one of the choices). Respondents will be told that one of their choices will be randomly chosen and that the choices are binding. Respondent (as long as they are expected utility maximizers) will have an incentive to reveal the true WTP.
Experimental Design Details
Randomization Method
To be decided based on piloting.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1000 entrepreneurs
Sample size: planned number of observations
1000 entrepreneurs
Sample size (or number of clusters) by treatment arms
The sample size for each treatment arm (each randomly allocated price) will be designed base on a calibration using baseline data.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Ethics Committee of Bocconi University
IRB Approval Date
2017-02-27
IRB Approval Number
Not available
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
July 31, 2018, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
February 28, 2019, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
831 entrepreneurs
Was attrition correlated with treatment status?
Yes
Final Sample Size: Total Number of Observations
831 entrepreneurs
Final Sample Size (or Number of Clusters) by Treatment Arms
BDM sample: Price Offered (sample size): 0 (74), 1,000(66), 3,000 (43), 5,000 (103), 10,000 (118), 15,000 (25), 20,000 (28) TIOLI sample: Price Offered (sample size): 0 (63), 5,000 (62), 10,000 (126), 15,000 (123)
Data Publication

Data Publication

Is public data available?
Yes
Public Data URL
https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/2TW2XG

Program Files

Program Files
Yes
Program Files URL
https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/2TW2XG
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
Business-training programs are typically offered for free. Charging a price for training provides potential benefits such as financial sustainability, but little is known about how price affects demand. We conducted two experiments in Jamaica using the Becker-DeGroot-Marschak (BDM) mechanism and take-it-or-leave-it offers to estimate the demand for training. Most entrepreneurs have positive willingness to pay for training, but demand falls sharply as price increases. Offering the chance to pay in installments does not increase demand. Higher prices screen out poorer, less educated entrepreneurs who have smaller firms. However, charging a higher price does increase attendance among those who pay. Finally, our paper points to the limitations of using a BDM mechanism in a context of low contract enforcement and when payments for purchasing an intangible service do not occur immediately.
Citation
Maffioli, Alessandro, David McKenzie, and Diego Ubfal. Estimating the Demand for Business Training: Evidence from Jamaica. Economic Development and Cultural Change 2023 72:1, 123-158
URL
https://www.journals.uchicago.edu/doi/10.1086/719031

Reports & Other Materials