Estimating the Demand for Business Training
Business training programs are typically offered for free. Charging for training provides potential benefits including financial sustainability, but little is known about how price affects the demand for training. This study conducted two experiments in Jamaica using the Becker-DeGroot-Marschak mechanism and take-it-or-leave-it offers to estimate the demand for training. Most entrepreneurs have a positive willingness to pay for training, but demand falls sharply as price increases: in the Becker-DeGroot-Marschak experiment, 76 percent of the entrepreneurs attend training when it is free, but only 43 percent attend when they are charged one-quarter of the cost, and only 11 percent when charged the full cost. Providing a credit option did not increase willingness to pay. Higher prices screen out poorer, older, and more risk-averse business owners, and those who expect to benefit less from training and have a low value of sales. However, charging a higher price increases attendance among those who pay, suggesting a psychological effect where paying for training makes firms value it more.
| Main Authors: | , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020-09
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| Subjects: | ENTREPRENEURSHIP EDUCATION, BUSINESS TRAINING, SMALL AND MEDIUM SIZE ENTERPRISE, AFRICA GENDER POLICY, GENDER INNOVATION LAB, FEMALE ENTREPRENEURS, DEMAND ELICITATION, PRICING SERVICES, TAKE-UP, WOMEN AND PRIVATE SECTOR DEVELOPMENT, |
| Online Access: | http://documents.worldbank.org/curated/en/687501600969435877/Estimating-the-Demand-for-Business-Training-Evidence-from-Jamaica https://hdl.handle.net/10986/34553 |
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| Summary: | Business training programs are typically
offered for free. Charging for training provides potential
benefits including financial sustainability, but little is
known about how price affects the demand for training. This
study conducted two experiments in Jamaica using the
Becker-DeGroot-Marschak mechanism and take-it-or-leave-it
offers to estimate the demand for training. Most
entrepreneurs have a positive willingness to pay for
training, but demand falls sharply as price increases: in
the Becker-DeGroot-Marschak experiment, 76 percent of the
entrepreneurs attend training when it is free, but only 43
percent attend when they are charged one-quarter of the
cost, and only 11 percent when charged the full cost.
Providing a credit option did not increase willingness to
pay. Higher prices screen out poorer, older, and more
risk-averse business owners, and those who expect to benefit
less from training and have a low value of sales. However,
charging a higher price increases attendance among those who
pay, suggesting a psychological effect where paying for
training makes firms value it more. |
|---|