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Raising achievement among microentrepreneurs: An experimental test of goals, incentives, and support groups in Medellin, Colombia

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  • Aguinaga, Paulina
  • Cassar, Alessandra
  • Graham, Jennifer
  • Skora, Lauren
  • Wydick, Bruce

Abstract

Inspired by the success of the California-based Family Independence Initiative (FII), we designed a field experiment to estimate the impact of an inexpensive program structured around goal-setting, small monetary incentives, and support groups on the achievement of business-related objectives. In collaboration with Medellin-based Bancos de las Opportunidades, we randomly assigned small business owners to one of four experimental groups that met regularly for six months and to two control groups. Our results show that the mere act of establishing a goal plays a large and significant role in individual outcomes. Yet, it was the full FII combination of goal-setting, monetary incentive, and group support that resulted in the highest level of total business sales, pointing to the existence of complementarities between economic, social, and psychological interventions. Our study contributes to the emerging literature demonstrating that low-cost interventions focused on the internal constraints of the poor can help facilitate pathways out of poverty.

Suggested Citation

  • Aguinaga, Paulina & Cassar, Alessandra & Graham, Jennifer & Skora, Lauren & Wydick, Bruce, 2019. "Raising achievement among microentrepreneurs: An experimental test of goals, incentives, and support groups in Medellin, Colombia," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 79-97.
  • Handle: RePEc:eee:jeborg:v:161:y:2019:i:c:p:79-97
    DOI: 10.1016/j.jebo.2019.02.017
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    References listed on IDEAS

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    More about this item

    Keywords

    Field experiment; Goal setting; Incentives; Self-help groups;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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