The Effects of Cognitive Ability on the Willingness of Low-Income Vietnamese Females to Invest in Business Development Services Training

Abstract

Using a survey of over 4,000 female microfinance clients in Vietnam, this study examines the effects of cognitive abilities on willingness of low-income Vietnamese females to invest in business development services (BDS) training. A probit model with sample selection model is used. The paper focuses on three cognitive abilities (numeracy, fluency, and recall), and finds that they all positively affect the willingness to pay for such BDS training. These results have important implications for policies designed to provide BDS training to the poor, and should help shape the business models of microfinance providers. Testing cognitive abilities may help target the most profitable low-income markets.