Economics of non-cognitive skills: a Ugandan example

Laura Camfield, University of East Anglia l.camfield@uea.ac.uk

What skills are valued by young entrepreneurs in Kampala?

How do these map to non-cognitive skills?

Can we see these skills facilitating social mobility in specific entrepreneurs’ lives?

Or do these examples suggest that other factors (or structures), not captured by the language of ‘skills’, are more important?

Key questions

What are non-cognitive skills? What is an entrepreneur? Site and sample Initial data from group and individual interviews Tentative conclusions

Outline

Individual differences that are independent of cognitive ability, e.g. ◦ personality (Paunonen and Ashton, 2001, Paunonen, 2003,

Borghans et al, 2008) ◦ self-regulation, motivation, and time preference (Heckman,

2007)◦ locus of control (Heckman et al, 2005) ◦ perseverance (Duckworth et al, 2007)

See also ‘soft’, ‘personal’, ‘social and emotional’, ‘life skills, social competencies’ etc.

Assumed to be universal and malleable - skills not traits

What are non-cognitive skills?

Sociologists, e.g. Bowles and Gintis, 1976 Economists, e.g. Gronqvist et al, 2011 Psychologists

single, related construct (e.g. ‘executive function’ - Blair and Razza, 2007)

separate components (e.g. Grit – Duckworth et al, 2007) Impact evaluators, e.g. Ibarran et al, 2012

life skills in India and Dominican republic Computer Assisted Learning in China motivational videos in Ethiopia elite teachers in Chile...

Who measures them?

Genetic component, but perceived as more malleable than cognitive skills (Cunha and Heckman, 2007) with a larger ‘window’ for intervention

Heckman et al, 2009: Perry Preschool Project Better predictor than IQ or school achievement of

performance in business, employment (salary, getting and retaining jobs), civic participation, crime, etc. ◦ Heckman and Rubenstein, 2001: GED testing programme

Opportunity for development researchers to take more subjective factors into account?

Why?

Schumpeter (1949) – innovating, introducing new technologies, increasing efficiency and productivity, generating new products or services

What is an entrepreneur?‘an individual who organizes and operates a business or businesses, taking on financial risk to do so’ (e.g. GEM, but OECD?)

Entrepreneurial attitudes? (Boshoff & Hoole, 1998) Entrepreneurial Attitude Orientation Scale (Robinson et al,

1991) in a South Africa sample USA - 5 factors, Innovation, Achievement, Self-esteem,

Personal control, Machiavellianism South Africa -3 factors, Innovation, Achievement,

Assertiveness Entrepreneurial personality? (Zhao et al, 2010)

Highest possible value in extraversion, conscientiousness, OE, lowest possible in agreeableness and neuroticism (Obschonka et al, 2013 – predictive in US, Germany, UK)

Highest possible value in extraversion, agreeableness, OE, higher than average neuroticism (own analyses using STEPS)

Predicting entrepreneurship

Kampala, Uganda

Four focus groups with male and female entrepreneurs, predominantly <30 years old, working in marketplaces in Kampala, supplemented by secondary analysis of five focus groups collected by GIGA in 2012

16 in-depth interviews with Kampalan entrepreneurs aged 23 to 40 (31% male), conducted 2012 by GIGA, repeated by me + Lugandan speaking research team 2013

Nakulabye market 1 (5 men, > 5 yrs exp, traders in charcoal, poultry, fruit and veg)

Nakulabye market 2 (5 women, > 5 yrs exp, traders in tomatoes, hardware, cooked food)

Nakawa market 1 (6 men, < 5 yrs exp, traders in vegetables)

Nakawa market 2 (women, ~ 5 yrs exp, traders in fruit and vegetables)

       Listening (9/9) Luck (6/8) Capital (8/9) Patience (10/11)

Customer Care (8/9) Trust (5/8) Trust andHonesty (7/9)

Trust (9/11)

Trust andHonesty (7/9)

Creativity (4/8) Able to identify quality = Customer care (5/9)

Planning (7/11)

Respect (6/9) Customer care (3/8) Communication (4/9) Able to identify quality =  Budgeting (6/11)

Other skills (in descending order of importance):  Patience, Able to identify quality, Calm, Experience, Hard work

Other skills (in descending order of importance):  Customer Care, Shrewdness, Patience, Politeness

Other skills (in descending order of importance):  Friendly, Confidence and determination,Market Awareness, Accommodating

Other skills (in descending order of importance):  Pricing, Customer Care, Savings, Training, Diversification, Presentation

Skills elicited through pair wise ranking

Most important skills from the focus groups were trust, customer care, listening/ communication

Reliability was also important in rankings with individuals◦ if you don’t respect a customer, you cannot get anything◦ If you do not care about your customers, they will run away from you;

the more you care about your customers the more you attract other customers

◦ You entice them by chatting and making fun with them, peel bananas for them, and by the time he/she comes back tomorrow, you tell them a different story; Speaking to people well, handling customers, what ever comes, say politics, sports I easily adopt the changes so as to be at the same page with my customers.

◦ everything just comes smoothly if you are so friendly to everyone. It will make it easy for your life and your business.

Illustrative quotes

Examples Reference

Motivation, perseverance, trustworthiness, adaptability, task persistence, thinking ahead and self-discipline

Heckman and Rubinstein 2001

Motivation, perseverance and tenacity Heckman 2006Socio-emotional skills, physical and mental health, perseverance, attention, motivation, and self confidence  

Heckman, Stixrud, and Urzua, 2006 

Perseverance, motivation, time preference, risk aversion, self-esteem, self-control, preference for leisure, patience, risk aversion and time preference

Cunha and Heckman, 2008

How does this compare with non-cognitive skills?

Agnes, age 28, vegetable vendor1st Customer care

'I have to be polite to them, wrap the things they have bought well and put them in a plastic bag. I cannot leave them to take them in their hands. They will not come back. I also have to add something extra like a tomato or an onion so that they can come again'

2nd Presentation 3rd Consistent pricing - ‘all those who come whether they are foreigners or local people will pay that amount’ (range of languages)

Also relationships with husband, neighbours and other vendors, suppliers and savings groups

Relocation of potential competitors

Francis, age 27, soap vendor1st Being trustworthy

If a person is trustworthy, most people will like him especially in business. You may start with small capital others can assist you... if you don’t trust someone you don’t deal with him

2nd Capital/ Savings People have skills but they are not very important in business… Even the educated people need capital because there are no jobs… If you have all the skills in this world you will do nothing if you don’t have capital.

3rd Hope If you don’t have hope you cannot be patient [‘everything is based on patience’]. Hope is more important because with no hope there is nothing the person is working for.

Reciprocal relationships with other vendors

Increasing interest in non-cognitive skills and traction among policymakers

But are they what matters to the people we are working with and do we know enough about them to use them successfully?

Valuable advocacy tool in relation to young children

Relevance for young people? Importance of patience (Mains, 2013) And ‘social navigation’ (openness and agreeableness support

relationships across generational hierarchies – de Weedt, 2009)

Conclusions

The skills agenda: classic misdirection?

Does focusing on individuals without looking at their contexts and their relationships direct our attention away from structural constraints and the relational resources that enable people to overcome these?

http://www.huffingtonpost.com/jonathan-richards/misdirection_b_685775.html

Thanks to the German Institute of Global and Area Studies and KfW Development Bank for access to a sample of entrepreneurs and related qualitative data previously collected in Uganda as part of a project on entrepreneurship

Acknowledgements