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Instant gratification: temporal discounting and self-employment

Author

Listed:
  • Marcus T. Wolfe

    (University of Oklahoma)

  • Pankaj C. Patel

    (Villanova University)

Abstract

Differences in temporal discounting could separate self-employed individuals from employees working for wages. Drawing on a sample of 13,198 individuals, from the 2012–2013 cross-sectional STEP Skills Measurement Survey, we find that higher temporal discounting is more positively associated with the likelihood of self-employment. We further find that younger individuals with higher temporal discounting are more likely to engage in self-employment. The association of lower socioeconomic status at a young age or those who experienced economic shocks at a young age with the likelihood of self-employment is only significant when interaction effects of temporal discounting and age are present in the model. Risk seeking is not associated with the likelihood of engagement in self-employment under higher discounting. These findings have implications for the self-employment literature as well as the literature on behavioral decision making.

Suggested Citation

  • Marcus T. Wolfe & Pankaj C. Patel, 2017. "Instant gratification: temporal discounting and self-employment," Small Business Economics, Springer, vol. 48(4), pages 861-882, April.
    • Handle: RePEc:kap:sbusec:v:48:y:2017:i:4:d:10.1007_s11187-016-9823-9
    DOI: 10.1007/s11187-016-9823-9
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