IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v98y2012i1p58-70.html
   My bibliography  Save this article

Measuring the return on household enterprise: What matters most for whom?

Author

Listed:
  • Samphantharak, Krislert
  • Townsend, Robert M.

Abstract

Return on assets (ROA) of household enterprise is crucial for understanding the productivity of households in developing economies. Yet the definition and measurement of household enterprise ROA remain inconsistent or unclear. We illustrate potential measurement problems with examples from various surveys. We take advantage of a detailed household survey and analyze what matters and for whom. The three issues that matter most for measurement of household enterprise ROA are the choice of accrual versus cash income, the treatment of household labor in enterprise income, and the treatment of non-factor income. This sensitivity matters most for a poorer region dominated by cultivation relative to a richer region with non-farm enterprises. Though the choice between accrued and cash income matters less when the frequency of the data declines, there remains high sensitivity in annualized data. We provide recommendations on how to improve the survey questionnaires for more accurate measurement in field research.

Suggested Citation

  • Samphantharak, Krislert & Townsend, Robert M., 2012. "Measuring the return on household enterprise: What matters most for whom?," Journal of Development Economics, Elsevier, vol. 98(1), pages 58-70.
    • Handle: RePEc:eee:deveco:v:98:y:2012:i:1:p:58-70
    DOI: 10.1016/j.jdeveco.2011.09.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304387811000897
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jdeveco.2011.09.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Esther Duflo & Michael Kremer & Jonathan Robinson, 2008. "How High Are Rates of Return to Fertilizer? Evidence from Field Experiments in Kenya," American Economic Review, American Economic Association, vol. 98(2), pages 482-488, May.
    2. Beaman, Lori & Dillon, Andrew, 2012. "Do household definitions matter in survey design? Results from a randomized survey experiment in Mali," Journal of Development Economics, Elsevier, vol. 98(1), pages 124-135.
    3. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
    4. anonymous, 2000. "The brave new world of agriculture," EconSouth, Federal Reserve Bank of Atlanta, vol. 2(Q3), pages 8-13.
    5. Dillon, Andrew & Bardasi, Elena & Beegle, Kathleen & Serneels, Pieter, 2012. "Explaining variation in child labor statistics," Journal of Development Economics, Elsevier, vol. 98(1), pages 136-147.
    6. David McKenzie & Christopher Woodruff, 2008. "Experimental Evidence on Returns to Capital and Access to Finance in Mexico," The World Bank Economic Review, World Bank, vol. 22(3), pages 457-482, November.
    7. Samphantharak,Krislert & Townsend,Robert M., 2010. "Households as Corporate Firms," Cambridge Books, Cambridge University Press, number 9780521195829, September.
    8. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    9. Christopher Udry & Santosh Anagol, 2006. "The Return to Capital in Ghana," American Economic Review, American Economic Association, vol. 96(2), pages 388-393, May.
    10. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
    11. Banerjee, Abhijit V. & Duflo, Esther, 2005. "Growth Theory through the Lens of Development Economics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 7, pages 473-552, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krislert Samphantharak & Robert Townsend, 2016. "Risk and Return in Village Economies," PIER Discussion Papers 27, Puey Ungphakorn Institute for Economic Research.
    2. Liebenehm, Sabine & Menkhoff, Lukas & Waibel, Hermann, 2021. "Risk Attitudes and Returns in Rural Economies: Evidence from Thailand and Vietnam," 2021 Conference, August 17-31, 2021, Virtual 314997, International Association of Agricultural Economists.
    3. Brian McCaig & Nina Pavcnik, 2021. "Entry and Exit of Informal Firms and Development," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(3), pages 540-575, September.
    4. Rodríguez Torres, Omar, 2022. "The productive role of social policy," MERIT Working Papers 2022-010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Danny Turkson & Emmanuel A. Codjoe, 2021. "The Household Enterprise Sector in Ghana: Overview and Challenges," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(8), pages 140-140, July.
    6. Krislert Samphantharak & Robert M. Townsend, 2018. "Risk and Return in Village Economies," American Economic Journal: Microeconomics, American Economic Association, vol. 10(1), pages 1-40, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maazullah, & Bedi, Arjun S., 2017. "Returns to Islamic Microfinance: Evidence from a Randomized Experiment in Pakistan," IZA Discussion Papers 10965, Institute of Labor Economics (IZA).
    2. Jean-Louis Warnholz, 2008. "Is investment in Africa low despite high profits?," CSAE Working Paper Series 2008-31, Centre for the Study of African Economies, University of Oxford.
    3. Pascaline Dupas & Jonathan Robinson, 2013. "Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 163-192, January.
    4. Ali, Merima & Peerlings, Jack & Zhang, Xiaobo, 2010. "Clustering as an organizational response to capital market inefficiency: Evidence from handloom enterprises in Ethiopia," IFPRI discussion papers 1045, International Food Policy Research Institute (IFPRI).
    5. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 1-32, July.
    6. Krislert Samphantharak & Robert M. Townsend, 2018. "Risk and Return in Village Economies," American Economic Journal: Microeconomics, American Economic Association, vol. 10(1), pages 1-40, February.
    7. Karlan, Dean S. & Knight, Ryan & Udry, Christopher R., 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," Center Discussion Papers 133405, Yale University, Economic Growth Center.
    8. Michael Grimm & Simon Lange & Jann Lay, 2011. "Credit-constrained in risky activities? The determinants of capital stocks of micro and small firms in Western Africa," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 104, Courant Research Centre PEG.
    9. Negrete Garcia, Ana Karen, 2018. "Constrained Potential: A Characterisation of Mexican Microenterprises," GIGA Working Papers 309, GIGA German Institute of Global and Area Studies.
    10. Marcel Fafchamps & David McKenzie & Simon Quinn & Christopher Woodruff, 2011. "When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana," CSAE Working Paper Series 2011-11, Centre for the Study of African Economies, University of Oxford.
    11. Khandker, Shahidur R. & Samad, Hussain A. & Ali, Rubaba, 2013. "Does access to finance matter in microenterprise growth ? evidence from Bangladesh," Policy Research Working Paper Series 6333, The World Bank.
    12. Fiala, Nathan & Masselus, Lise, 2022. "Whom to ask? Testing respondent effects in household surveys," Ruhr Economic Papers 935, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    13. Martijn Boermans & Daan Willebrands, 2012. "Financial constraints, risk taking and firm performance: Recent evidence from microfinance clients in Tanzania," DNB Working Papers 358, Netherlands Central Bank, Research Department.
    14. Kazushi Takahashi & Abu Shonchoy & Seiro Ito & Takashi Kurosaki, 2017. "How Does Contract Design Affect the Uptake of Microcredit among the Ultra-poor? Experimental Evidence from the River Islands of Northern Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 53(4), pages 530-547, April.
    15. Masselus, Lise & Fiala, Nathan, 2024. "Whom to ask? Testing respondent effects in household surveys," Journal of Development Economics, Elsevier, vol. 168(C).
    16. Dominik Naeher, 2022. "Technology Adoption Under Costly Information Processing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 699-753, May.
    17. Blattman, Christopher & Fiala, Nathan & Martinez, Sebastian, 2011. "Employment generation in rural Africa : mid-term results from an experimental evaluation of the Youth Opportunities Program in Northern Uganda," Social Protection Discussion Papers and Notes 66523, The World Bank.
    18. Fafchamps, Marcel & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2014. "Microenterprise growth and the flypaper effect: Evidence from a randomized experiment in Ghana," Journal of Development Economics, Elsevier, vol. 106(C), pages 211-226.
    19. Karlan, Dean & Morduch, Jonathan, 2010. "Access to Finance," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4703-4784, Elsevier.

    More about this item

    Keywords

    Return on assets; Household enterprise; Measurement; Income; Assets; Survey; Questionnaire design;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:98:y:2012:i:1:p:58-70. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.