Journal Article
Curb your enthusiasm: optimistic entrepreneurs earn less
Authors
Publication date
26 Sep 2018
Summary
This paper concerns the implications of biased beliefs on entrepreneurial earnings. Amongst self-employed business owners, income is decreasing in optimism measured whilst still an employee. Controlling for earnings in paid employment, self-employment earnings of those with optimism above the mean are some 30% less than those with optimism below the mean. For employees, it is optimists that have higher earnings. These and associated results suggest that mistaken expectations lead to entry errors. As a test of external validity, future divorcees turn out to be financial optimists, indicating our measure captures an intrinsic psychological trait associated with rash decisions.
Published in
European Economic Review
DOI
https://doi.org/10.1016/j.euroecorev.2018.08.007
Subjects
Psychology, Management: Business, Labour Market, Organizations And Firms, and Wages And Earnings
Links
University of Essex, Albert Sloman Library Periodicals *restricted to University of Essex registered users* - http://serlib0.essex.ac.uk/record=b1628528~S5
Notes
Online Early
Related publications
-
Entrepreneurs are far too optimistic about success, say researchers
Christopher Dawson, David de Meza, Andrew Henley, et al.
-
It pays to be pessimistic, shows new research into entrepreneurs
Christopher Dawson, David de Meza, Andrew Henley, et al.
-
Dragons' Den encouraging 'wishful thinkers' to set up businesses doomed to fail, says study
Christopher Dawson, David de Meza, Andrew Henley, et al.
-
Why optimism and entrepreneurship are not always a good mix for business
Christopher Dawson, David de Meza, Andrew Henley, et al.
#525294