Overoptimistic Entrepreneurs: Predicting Wellbeing Consequences of Self-Employment

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Overoptimistic Entrepreneurs: Predicting Wellbeing Consequences of Self-Employment

Discussion paper / Internet publication

ID	4098674
Author(s)	Odermatt, Reto; Powdthavee, Nattavudh; Stutzer, Alois
Author(s) at UniBasel	Odermatt, Reto Stutzer, Alois
Year	2017
Month and day	10-01
Title	Overoptimistic Entrepreneurs: Predicting Wellbeing Consequences of Self-Employment
Series title	IZA Discussion Paper
Number	11098
Publisher / Institution	IZA Institute of Labor Economics
URL	http://ftp.iza.org/dp11098.pdf
Keywords	adaptation; overoptimism; life satisfaction; projection bias; wellbeing; self-employed
Abstract	The formation of expectations is a fundamental part of the process when people decide about engaging in an entrepreneurial venture. We evaluate the accuracy of newly self-employed people's predictions of their overall future wellbeing. Based on individual panel data for Germany, we find that they are overly optimistic when we compare their predicted life satisfaction with their actual life satisfaction five years later on. This overoptimism also holds for those entrepreneurs who successfully remain in business for at least five years. A possible reason might be that they underestimate the heavy workload reflected in higher working hours than desired and the drop in leisure satisfaction.
edoc-URL	http://edoc.unibas.ch/57913/
Full Text on edoc	No

02/05/2024

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