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

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  • 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
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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).
    2. Krislert Samphantharak & Robert Townsend, 2016. "Risk and Return in Village Economies," PIER Discussion Papers 27, Puey Ungphakorn Institute for Economic Research.
    3. 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.
    4. 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.
    5. 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.
    6. 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.

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    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

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