Less is More: Experimental Evidence on Heuristic-Based Business Training in Ecuador

Using a randomized-control trial, we tested the effectiveness of a traditional training program and a tailor-made training program based on heuristics—practical approaches to problem solving that require low cognitive effort—for microentrepreneurs in Ecuador. We find that the heuristic training has statistically significant and economically meaningful impacts on indexes of sales and profits relative to the control, with effect sizes of 0.06 and 0.08 standard deviations, respectively (equivalent to increases of 7.3 percent in sales and 8.2 percent in profits with respect to the control group). Results are larger in magnitude for female than for male entrepreneurs and for microentrepreneurs with low recall (in the digit span recall test, a measure correlated with the ability to use attention to avoid distraction) than for entrepreneurs with high recall. The traditional training, meanwhile, did not have any significant impact on these measures relative to the control group. JEL Classification: C93, L26, O12