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Measuring Microenterprise Profits: Must We Ask How the Sausage Is Made?

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dc.contributor.authorDe Mel, Suresh
dc.contributor.authorMcKenzie, David J.
dc.contributor.authorWoodruff, Christopher
dc.date.accessioned2012-03-30T07:33:35Z
dc.date.available2012-03-30T07:33:35Z
dc.date.issued2009
dc.description.abstractA large share of the World's poor is self-employed. Accurate measurement of profits from microenterprises is therefore critical for studying poverty and inequality, measuring the returns to education, and evaluating the success of microfinance programs. However, a myriad of problems plague the measurement of profits. This paper reports on a variety of different experiments conducted to better understand the importance of some of these problems, and to draw recommendations for collecting profit data. In particular, we (i) examine how far we can reconcile self-reported profits and reports of revenue minus expenses through more detailed questions; (ii) examine recall errors in sales, and report on the results of experiments which randomly allocated account books to firms; and (iii) asked firms how much firms like theirs underreport sales in surveys like ours, and had research assistants observe the firms at random times 15-16 times during a month to provide measures for comparison. We conclude that firms underreport revenues by about 30%, that account diaries have significant impacts on both revenues and expenses, but not on profits, and that simply asking profits provides a more accurate measure of firm profits than detailed questions on revenues and expenses.en
dc.identifier.citationJournal of Development Economics
dc.identifier.issn03043878
dc.identifier.urihttps://hdl.handle.net/10986/5594
dc.language.isoEN
dc.rightsCC BY-NC-ND 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/igo
dc.subjectLabor Demand J230
dc.subjectFirm Performance: Size, Diversification, and Scope L250
dc.subjectIndustrialization
dc.subjectManufacturing and Service Industries
dc.subjectChoice of Technology O140
dc.subjectEconomic Development: Financial Markets
dc.subjectSaving and Capital Investment
dc.subjectCorporate Finance and Governance O160
dc.subjectMicrodata Set
dc.titleMeasuring Microenterprise Profits: Must We Ask How the Sausage Is Made?en
dc.title.alternativeJournal of Development Economicsen
dc.typeJournal Articleen
dc.typeArticle de journalfr
dc.typeArtículo de revistaes
dspace.entity.typePublication
okr.doctypeJournal Article
okr.externalcontentExternal Content
okr.identifier.externaldocumentum516
okr.journal.nbpages19-31
okr.language.supporteden
okr.peerreviewAcademic Peer Review
okr.relation.associateddatasethttp://microdata.worldbank.org/index.php/catalog/1243
okr.relation.associatedurlhttp://dx.doi.org/10.1016/j.jdeveco.2008.01.007
okr.relation.associatedurlhttp://search.ebscohost.com/login.aspx?direct=true&db=eoh&AN=1008709&site=ehost-live
okr.relation.associatedurlhttp://www.elsevier.com/wps/find/journaldescription.cws_home/505546/description#description
okr.relation.associatedurlhttps://openknowledge.worldbank.org/handle/10986/7075
okr.volume88
relation.isAuthorOfPublication148d6d6d-76e5-5d6f-9af9-98313e30551f
relation.isAuthorOfPublication.latestForDiscovery148d6d6d-76e5-5d6f-9af9-98313e30551f
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