Compensating income variation in health and subjective well-being for the self-employed

Pankaj C. Patel*, Mike G. Tsionas, Pejvak Oghazi

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

1 Citation (Scopus)


Complementing growing interest in entrepreneurship and well-being, we apply a conceptualization of compensating income variation (CIV) – how much extra income an individual would require offsetting the loss in subjective well-being from a unit decline in health – in health economics to entrepreneurship. We hypothesize and test the extent of the CIV among the self-employed and whether the CIV varies by sex and age. We use a Bayesian vector auto-regression model in the Household, Income, and Labour Dynamics in Australia (HILDA) Survey data. We find that the CIV for the self-employed (employed) was AUD 10,315 (AUD 6,873) annually for a unit decrease in subjective well-being. We do not find significant differences in the CIV among the self-employed by sex and age. The findings show that the self-employed requires higher compensatory income to accept poorer health.

Original languageEnglish
Article number113815
Peer-reviewed scientific journalJournal of Business Research
Publication statusPublished - 05.2023
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • Age
  • Compensating income variation
  • Self-employed
  • Sex


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