Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy

22 Pages Posted: 7 Apr 2008

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Abstract

One can be independent, or one can be subject to decisions made by others. This paper argues that this difference, embodied in the institutional distinction between the decision-making procedures market and hierarchy, affects individual wellbeing beyond outcomes. Taking self-employment as an important case of independence, it is shown that the self-employed derive higher satisfaction from work than those employed in organizations, irrespective of income gained or hours worked. This is evidence for procedural utility: people value not only outcomes, but also the processes leading to outcomes.

Suggested Citation

Frey, Bruno S., Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy. Economica, Vol. 75, Issue 298, pp. 362-383, May 2008. Available at SSRN: https://ssrn.com/abstract=1117050 or http://dx.doi.org/10.1111/j.1468-0335.2007.00594.x

Bruno S. Frey

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

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