Abstract

http://ssrn.com/abstract=2297699
 


 



Living Forever: Entrepreneurial Overconfidence at Older Ages


Patrick J. F. Groenen


Erasmus University Rotterdam (EUR)

Philipp Koellinger


Erasmus School of Economics; Erasmus Research Institute of Management (ERIM); University of Amsterdam Business School

Matthijs J. H. M. Van der Loos


Erasmus University Rotterdam (EUR) - Department of Applied Economics; Erasmus Research Institute of Management (ERIM); Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Roy Thurik


Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC); Erasmus Research Institute of Management (ERIM); EIM Netherlands - Business and Policy Research; Tinbergen Institute

July 23, 2013

ERIM Report Series Reference No. ERS-2013-012-STR

Abstract:     
Overconfidence has been proposed as an explanation for excess market entry by entrepreneurs and low returns in entrepreneurial activities. However, establishing that entrepreneurs are more overconfident than non-entrepreneurs requires the use of representative population samples; in addition, econometric endogeneity issues in survey data must be addressed. To overcome these methodological challenges, we use a measure of overconfidence that employs self-reports of life expectancy. These self-reports are compared to actual life spans in a large sample of the US population. We show that entrepreneurs are indeed more overconfident than non-entrepreneurs. By using fixed-effects panel regression—and thus by exploiting the longitudinal nature of our data—we provide evidence that changes in entrepreneurial status are not associated with changes in subjective life expectancy. These two findings in combination offer evidence that overconfident individuals self- select into entrepreneurship.

Keywords: entrepreneurship, selection, life expectancy, self-employment, overconfidence

working papers series





Not Available For Download

Date posted: July 24, 2013  

Suggested Citation

Groenen, Patrick J. F. and Koellinger, Philipp and van der Loos, Matthijs J. H. M. and Thurik, Roy, Living Forever: Entrepreneurial Overconfidence at Older Ages (July 23, 2013). ERIM Report Series Reference No. ERS-2013-012-STR. Available at SSRN: http://ssrn.com/abstract=2297699

Contact Information

Patrick J. F. Groenen
Erasmus University Rotterdam (EUR) ( email )
P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
Philipp Koellinger
Erasmus School of Economics ( email )
Netherlands
Erasmus Research Institute of Management (ERIM) ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands
University of Amsterdam Business School ( email )
Roetersstraat 18
Amsterdam, 1018WB
Netherlands
Matthijs J. H. M. Van der Loos
Erasmus University Rotterdam (EUR) - Department of Applied Economics ( email )
Netherlands
Erasmus Research Institute of Management (ERIM) ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands
Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )
P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
Roy Thurik
Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC) ( email )
3000 DR Rotterdam
Netherlands
+31 10 408 2232 (Phone)
+31 10 408 9146 (Fax)
HOME PAGE: http://www.thurik.com
Erasmus Research Institute of Management (ERIM) ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands
EIM Netherlands - Business and Policy Research
Postbus 7001
2701 AA Zoetermeer
Netherlands
+31 79 341 3634 (Phone)
+31 79 331 3742 (Fax)
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
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