Template-Type: ReDIF-Paper 1.0
Author-Name: Rietveld, C.A.
Author-Name-Last: Rietveld
Author-Name-First: Niels
Author-Name: Groenen, P.J.F.
Author-Name-Last: Groenen
Author-Name-First: Patrick
Author-Person: pgr229
Author-Name: Koellinger, Ph.D.
Author-Name-Last: Koellinger
Author-Name-First: Philipp
Author-Person: pko149
Author-Name: van der Loos, M.J.H.M.
Author-Name-Last: van der Loos
Author-Name-First: Matthijs
Author-Name: Thurik, A.R.
Author-Name-Last: Thurik
Author-Name-First: Roy
Author-Person: pth26
Title: Living Forever: Entrepreneurial Overconfidence at Older Ages
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.
Creation-Date: 2013-07-23
File-URL: https://repub.eur.nl/pub/40673/ERS-2013-012-STR.pdf
File-Format: application/pdf
Series: RePEc:ems:eureri
Number: ERS-2013-012-STR
Classification-JEL: D21, L20
Keywords: entrepreneurship, life expectancy, overconfidence, selection, self-employment
Handle: RePEc:ems:eureri:40673