Entrepreneurship: Cause or Consequence of Financial Optimism?
David de Meza,
Andrew Henley () and
Reza (Gholamreza) Arabsheibani ()
No 6844, IZA Discussion Papers from Institute of Labor Economics (IZA)
Extant evidence that the self-employed overestimate their returns by more than employees do is consistent with two mutually inclusive possibilities. Self-employment may generate optimism or optimists may be drawn to self-employment. This paper finds that employees who will be self-employed in the future overestimate their short-run financial wellbeing by more than those who never become self-employed. When actually self-employed they are even more optimistic. Employees aspiring to start their own business are also of above average optimism. Cross-sectional findings are therefore an amalgam of psychological disposition and environmental factors, as theory requires if optimism is to be a causal influence on entrepreneurship.
Keywords: financial optimism; expectations; self-employment (search for similar items in EconPapers)
JEL-codes: D84 M13 (search for similar items in EconPapers)
Pages: 51 pages
New Economics Papers: this item is included in nep-bec and nep-ent
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Published - published in: Journal of Economics and Management Strategy, 2014, 23(4), 717–742
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp6844
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