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

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

Abstract

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.

Suggested Citation

  • Patel, Pankaj C. & Tsionas, Mike G. & Oghazi, Pejvak, 2023. "Compensating income variation in health and subjective well-being for the self-employed," Journal of Business Research, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:jbrese:v:160:y:2023:i:c:s014829632300173x
    DOI: 10.1016/j.jbusres.2023.113815
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