Low Risk Aversion Encourages the Choice for Entrepreneurship: An Empirical Test of a Truism

Posted: 23 Feb 2002

See all articles by Mirjam van Praag

Mirjam van Praag

University of Amsterdam - Department of Economics; Copenhagen Business School; Tinbergen Institute; IZA Institute of Labor Economics

J.S. Cramer

Tinbergen Institute

Joop Hartog

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Nicole Jonker

De Nederlandsche Bank (DNB); De Nederlandsche Bank

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Abstract

Entrepreneurship is historically associated with risk bearing. Consequently, risk attitude is widely believed to affect the selection of individuals into entrepreneurial positions. The data used in our empirical analysis support the supposedly negative effect of risk-aversion on entrepreneurship selection. However, we feel not sufficiently confident about our measure of risk attitude to conclude anything concerning the causality of this relationship.

Keywords: Entrepreneurship, self-employment, risk-taking, occupational choice

JEL Classification: D81, J23, J24, M13

Suggested Citation

van Praag, Mirjam and Cramer, J.S. and Hartog, Joop and Jonker, Nicole, Low Risk Aversion Encourages the Choice for Entrepreneurship: An Empirical Test of a Truism. Journal of Economic Behavior and Organization, No. 1389, April 2002. Available at SSRN: https://ssrn.com/abstract=292268

Mirjam Van Praag (Contact Author)

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
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+31 20 525 4096 (Phone)
+31 20 525 4182 (Fax)

Copenhagen Business School ( email )

Kilevej 14A
Frederiksberg, 2000
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Tinbergen Institute

Gustav Mahlerlaan
Amsterdam
Netherlands

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

J.S. Cramer

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
+31294293060 (Phone)

Joop Hartog

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Nicole Jonker

De Nederlandsche Bank (DNB) ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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