Microenterprise Growth and the Flypaper Effect, Randomized Experiment 2008-2010
Enterprise Survey [en/oth]
There is a growing debate over whether aid is more effective when simply given as unrestricted cash compared to approaches such as conditional transfers which try to restrict how recipients use any money received. The idea that "money sticks where it hits" was dubbed the "flypaper effect" by Arthur Okun.
Through randomized experiment in Ghana, researchers tested two methods of aid delivery for microenterprises - in-kind grant that must be spent directly on the business, and a cash grant, which the owners can choose to spend how they like. The design follows closely the one used by de Mel et al (2008, 2012) in Sri Lanka. In Ghana, a sample of both female and male microenterprise owners who had no paid employees at the time of the baseline survey were randomly allocated into treatment and control groups. The treatment group received grants of 150 Ghanaian cedis (approximately $120 at market exchange rates at the time of the baseline). Half of the grants were provided in cash and half in kind. For the in-kind treatment, the owner was asked to choose any equipment or materials they would like for their business that added up to this amount, and then were accompanied by a research assistant who directly purchased these items. 793 microenterprises (479 female-owned and 314 male-owned) participated in the study.
The baseline survey of these firms was conducted in October and November 2008. The two pre-treatment survey rounds were followed up by four additional quarterly survey waves in May 2009, August 2009, November 2009, and February 2010. Of the 793 firms which completed the first two rounds, 730 answered the final wave.
Kind of Data
Sample survey data [ssd]
Unit of Analysis
v01 - Edited datasets for public distribution
The datasets include anonymized raw data for each of the six rounds of the main survey. In many cases there are two files for the round, one named Single, and one Multiple. The Single file has data arranged with one row per firm, for variables where there is only one answer per firm. The Multiple file has variables where there are multiple answers per firm, resulting in multiple rows per firm.
The Stata do file "JDEreplicationdata" was used for replicating the main tables in the "Microenterprise Growth and the Flypaper Effect: Evidence from a Randomized Experiment in Ghana" paper. The main data file “ReplicationDataGhanaJDE” has the data used for the paper. The "r7tomerge" file has some longer-term follow-up data for the seventh round of the survey (2012) conducted by Oxford. This data was used for one table in the paper.
The scope of the study includes:
- Personal and business information
- Household roster and expenditure
- Expectations and attitudes
- Attitudes and behavior
- New business details
- Hours worked
- Main product
- Changes in assets
- Current credit and loans
- Social network
- Household bargaining
- Gender and social norms
- Raven test
- Time usage
- Grant/treatment (if applicable)
Accra and Tema
Producers and sponsors
University of Oxford
University of Warwick
Gender Action Plan
Research Support Budget
First, enumeration areas (EAs) were selected with probability proportional to the number of households in these EAs according to the 2000 census. The research team randomly selected 70 EAs in Accra and 30 in Tema. Then, to reduce the costs of listing, the team subdivided EAs into equal areas, such that each area would contain approximately 70 to 80 households. This typically required dividing an EA into half or thirds. One of these areas was then randomly selected from each EA. Enumerators went door to door in this area to carry out a screening survey of each household. Households were screened to identify those with an individual aged 20 to 55 who was self-employed and working 30 or more hours per week in a business with no paid employees and no motorized vehicle. These criteria were used to select full-time microenterprise owners who were not so large that the grants in our experiment would have little effect.
This resulted in screening 7,567 households to identify 3,907 individuals who passed the screen. Only 19.4 percent of these individuals were male, showing the predominance of women among small enterprise owners in urban Ghana. Based on the gender mix of self-employed in these industries in the 2000 Census, researchers classified business sectors into male-dominated industries, identified as construction, repair services, manufacturing, and shoe making and repair; female-dominated industries, identified as hair and beauty care, and food and restaurant sales; and mixed industries, identified as trade and retail, and sewing and tailoring.
The aim was then to arrive at a sample of roughly 900 baseline firms stratified by gender and sector. In order to minimize the spillover from the treatments to be carried out, the team limited the sample from each EA to no more than 5 males in male-dominated and 5 males in mixed industries, and no more than 3 females in female-dominated and 3 females in mixed industries. Only one individual was chosen from any given household. This resulted in an initial sample of 907 firms, consisting of 538 females and 369 males. A baseline survey of these firms was conducted in October and November 2008.
Dates of Data Collection
Data Collection Mode
Computer Assisted Personal Interview [capi]
Data Collection Notes
Firms which completed the first two survey rounds were randomly allocated into three groups: a control group of 396 firms, a treatment group of 198 firms which would receive 150 Ghanaian cedis (approximately US$120 at the time of the baseline) in cash which they could use for any purpose, and a treatment group of 198 firms which would receive 150 cedis in equipment, materials, or inventories for their business. In the case of the in-kind treatment, the equipment or materials were selected by the firm owner and purchased directly by our research assistants with the owner. Recipients of in-kind grants were free to purchase any item suitable for their business and were not given any advice about what to purchase.
Researchers randomly selected when firms would receive their grant, staggering the timing of the grants, so that 198 firms were assigned to receive the grants after the second round, a further 181 firms assigned to receive the grants after the third round, and 18 firms were assigned to receive the grants after the fourth round.
Six questionnaires, one for each round
Use of the dataset must be acknowledged using a citation which would include:
- the Identification of the Primary Investigator
- the title of the survey (including country, acronym and year of implementation)
- the survey reference number
- the source and date of download
David McKenzie, World Bank; Marcel Fafchamps, Stanford University; Simon Quinn, University of Oxford; Christopher Woodruff, University of Warwick. Ghana Microenterprise Growth and the Flypaper Effect, Randomized Experiment (MGFERE) 2008-2010. Ref. GHA_2008_MGFERE_v01_M. Dataset downloaded from [URL] on [date].
Disclaimer and copyrights
The user of the data acknowledges that the original collector of the data, the authorized distributor of the data, and the relevant funding agency bear no responsibility for use of the data or for interpretations or inferences based upon such uses.