Instant gratification: temporal discounting and self-employment

Type Journal Article - Small Business Economics
Title Instant gratification: temporal discounting and self-employment
Author(s)
Volume 48
Issue 4
Publication (Day/Month/Year) 2017
Page numbers 861-882
URL https://link.springer.com/article/10.1007/s11187-016-9823-9
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.

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