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Instant gratification: temporal discounting and self-employment

Marcus T. Wolfe () and Pankaj C. Patel ()
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Marcus T. Wolfe: University of Oklahoma
Pankaj C. Patel: Villanova University

Small Business Economics, 2017, vol. 48, issue 4, 861-882

Abstract: Abstract Differences in temporal discounting could separate self-employed individuals from employees working for wages. Drawing on a sample of 13,198 individuals, from the 2012–2013 cross-sectional STEP Skills Measurement Survey, we find that higher temporal discounting is more positively associated with the likelihood of self-employment. We further find that younger individuals with higher temporal discounting are more likely to engage in self-employment. The association of lower socioeconomic status at a young age or those who experienced economic shocks at a young age with the likelihood of self-employment is only significant when interaction effects of temporal discounting and age are present in the model. Risk seeking is not associated with the likelihood of engagement in self-employment under higher discounting. These findings have implications for the self-employment literature as well as the literature on behavioral decision making.

Keywords: Temporal discounting; Self-employment; Early-life experiences (search for similar items in EconPapers)
Date: 2017
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