Abstract
Extant evidence that the self-employed overestimate their returns by a greater margin than employees is consistent with two mutually inclusive possibilities. Self-employment may foster optimism or intrinsic optimists may be drawn to self-employment. Previous research is generally unable to disentangle these effects because of reliance on cross-sectional data. Using longitudinal data, this paper finds that employees who will be self-employed in the future overestimate their short-term financial wellbeing by more than those who never become self-employed. Optimism is higher still when self-employed. These results suggest that the greater optimism of the self-employed reflects both psychological disposition and environmental factors. By providing greater scope for optimism, self-employment entices the intrinsically optimistic.
Original language | English |
---|---|
Pages (from-to) | 717-742 |
Journal | Journal of Economics and Management Strategy |
Volume | 23 |
Issue number | 4 |
Early online date | 25 Oct 2014 |
DOIs | |
Publication status | Published - 2014 |