Self-employment and risk aversion - Evidence from psychological test data

Jesper Ekelund; Edvard Johansson; Marjo-Riitta Järvelin; Dirk Lichtermann

doi:10.1016/j.labeco.2004.02.009

Self-employment and risk aversion - Evidence from psychological test data

Jesper Ekelund, Edvard Johansson, Marjo-Riitta Järvelin, Dirk Lichtermann

Economics, Vaasa

Research output: Contribution to journal › Article › Scientific › peer-review

127 Citations (Scopus)

Abstract

This paper investigates the effect of risk aversion on an individual's probability of being self-employed by using psychometric data from a large, population-based cohort of Finns born in 1966. We found that our measure of risk aversion, a facet of a basic temperament dimension, harm avoidance, has a significant negative effect on self-employment status. Since this measure is directly derived from a highly valid biosocial theory of normal personality variation (Arch. Gen. Psychiatry 44 (1987) 573) whose scalable dimensions manifest well before adulthood and remain stabile over lifetime, we argue that risk aversion is a psychological factor causative of the choice to become self-employed.

Original language	English
Peer-reviewed scientific journal	Labour economics
Volume	12
Issue number	5
Pages (from-to)	649-659
Number of pages	11
ISSN	0927-5371
DOIs	https://doi.org/10.1016/j.labeco.2004.02.009
Publication status	Published - 10.2005
MoE publication type	A1 Journal article - refereed

Keywords

511 Economics
Self-employment
Risk aversion
Psychological test data

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