Self-employment and attitudes towards risk:timing and unobserved heterogeneity

Brown, Sarah and Dietrich, Mike and Ortiz-Nunez, Aurora and Taylor, Karl (2011) Self-employment and attitudes towards risk:timing and unobserved heterogeneity. Journal of Economic Psychology, 32 (3). pp. 425-433. ISSN 0167-4870

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We explore the relationship between self-employment and attitudes towards financial risk using individual level data drawn from the US Panel Study of Income Dynamics (PSID), which includes measures of individuals’ attitudes towards hypothetical gambles allowing us to explore the implications of interpersonal differences in risk attitudes for the probability of self-employment. Our empirical findings suggest that willingness to take financial risk is positively associated with self-employment. By exploiting the panel aspect of the PSID, we find evidence, whilst controlling for unobserved individual heterogeneity, consistent with a causal relationship between attitudes towards risk and self-employment with attitudes towards risk measured prior to becoming self-employed having a statistically significant positive influence on the probability of future self-employment.

Item Type: Journal Article
Journal or Publication Title: Journal of Economic Psychology
Uncontrolled Keywords: /dk/atira/pure/subjectarea/asjc/3300/3312
Departments: Faculty of Health and Medicine > Health Research
ID Code: 62772
Deposited By: ep_importer_pure
Deposited On: 15 Mar 2013 11:48
Refereed?: Yes
Published?: Published
Last Modified: 29 Jan 2020 07:35

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