[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/lsu/lsuwpp/2019-07.html
   My bibliography  Save this paper

Do Attitudes Toward Risk Taking Affect Entrepreneurship? Evidence from Second-generation Americans

Author

Abstract
This paper empirically investigates the impact of willingness to take risks on the likelihood of being an entrepreneur. We use a quarter century of data on second-generation Americans from Current Population Surveys in conjunction with country level measures of willingness to take risks from the Global Preference Survey. The average level of risk taking in the country of origin is found to have a positive and significant impact on the likelihood of being an entrepreneur. A one-standard deviation increase in risk taking increases the probability of being an entrepreneur by 15 percent. We also examine other preferences and cultural measures including trust, patience, and individualism. We find that these do not have an impact on entrepreneurship, while risk taking continues to be significant.

Suggested Citation

  • Areendam Chanda & Bulent Unel, 2019. "Do Attitudes Toward Risk Taking Affect Entrepreneurship? Evidence from Second-generation Americans," Departmental Working Papers 2019-07, Department of Economics, Louisiana State University.
    • Handle: RePEc:lsu:lsuwpp:2019-07
    as

    Download full text from publisher

    File URL: https://www.lsu.edu/business/economics/files/workingpapers/pap19_07.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Dohmen & Armin Falk & Bart H. H. Golsteyn & David Huffman & Uwe Sunde, 2017. "Risk Attitudes Across The Life Course," Economic Journal, Royal Economic Society, vol. 127(605), pages 95-116, October.
    2. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    3. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    4. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, April.
    5. Erik Hurst & Benjamin Wild Pugsley, 2011. "What Do Small Businesses Do?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 73-142.
    6. Enrico Spolaore & Romain Wacziarg, 2009. "The Diffusion of Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 469-529.
    7. Quamrul Ashraf & Oded Galor, 2008. "Human Genetic Diversity and Comparative Economic Development," 2008 Meeting Papers 617, Society for Economic Dynamics.
    8. Stelios Michalopoulos, 2012. "The Origins of Ethnolinguistic Diversity," American Economic Review, American Economic Association, vol. 102(4), pages 1508-1539, June.
    9. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    10. Alberto Alesina & Paola Giuliano & Nathan Nunn, 2013. "On the Origins of Gender Roles: Women and the Plough," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 469-530.
    11. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    12. Erik Hurst & Annamaria Lusardi, 2004. "Liquidity Constraints, Household Wealth, and Entrepreneurship," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 319-347, April.
    13. Ross Levine & Yona Rubinstein, 2017. "Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(2), pages 963-1018.
    14. Galor, Oded & Michalopoulos, Stelios, 2012. "Evolution and the growth process: Natural selection of entrepreneurial traits," Journal of Economic Theory, Elsevier, vol. 147(2), pages 759-780.
    15. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2014. "Personality characteristics and the decisions to become and stay self-employed," Small Business Economics, Springer, vol. 42(4), pages 787-814, April.
    16. Pamela Jakiela & Owen Ozier, 2019. "The Impact of Violence on Individual Risk Preferences: Evidence from a Natural Experiment," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 547-559, July.
    17. Robert W. Fairlie & Bruce D. Meyer, 2003. "The Effect of Immigration on Native Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 619-650, July.
    18. Oded Galor & Ömer Özak, 2016. "The Agricultural Origins of Time Preference," American Economic Review, American Economic Association, vol. 106(10), pages 3064-3103, October.
    19. Mocan, Naci, 2019. "Taxes and culture of leisure: Impact on labor supply in Europe," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 618-639.
    20. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
    21. Chihmao Hsieh & Simon C. Parker & C. Mirjam Praag, 2017. "Risk, balanced skills and entrepreneurship," Small Business Economics, Springer, vol. 48(2), pages 287-302, February.
    22. Pekkala Kerr, Sari & Kerr, William, 2020. "Immigrant entrepreneurship in America: Evidence from the survey of business owners 2007 & 2012," Research Policy, Elsevier, vol. 49(3).
    23. Oana Borcan & Ola Olsson & Louis Putterman, 2018. "State history and economic development: evidence from six millennia," Journal of Economic Growth, Springer, vol. 23(1), pages 1-40, March.
    24. Caliendo, Marco & Fossen, Frank & Kritikos, Alexander, 2012. "Trust, positive reciprocity, and negative reciprocity: Do these traits impact entrepreneurial dynamics?," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 394-409.
    25. Thomas Astebro & Holger Herz & Ramana Nanda & Roberto A. Weber, 2014. "Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 49-70, Summer.
    26. Armin Falk & Anke Becker & Thomas Dohmen & David Huffman & Uwe Sunde, 2023. "The Preference Survey Module: A Validated Instrument for Measuring Risk, Time, and Social Preferences," Management Science, INFORMS, vol. 69(4), pages 1935-1950, April.
    27. Louis‐Philippe Beland & Bulent Unel, 2019. "Politics and entrepreneurship in the US," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 33-57, February.
    28. Haltiwanger, John & Hurst, Erik & Miranda, Javier & Schoar, Antoinette (ed.), 2017. "Measuring Entrepreneurial Businesses," National Bureau of Economic Research Books, University of Chicago Press, number 9780226454078, September.
    29. Grossman, Gene M, 1984. "International Trade, Foreign Investment, and the Formation of the Entrepreneurial Class," American Economic Review, American Economic Association, vol. 74(4), pages 605-614, September.
    30. J Vernon Henderson & Tim Squires & Adam Storeygard & David Weil, 2018. "The Global Distribution of Economic Activity: Nature, History, and the Role of Trade1," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(1), pages 357-406.
    31. Francesco Giavazzi & Ivan Petkov & Fabio Schiantarelli, 2019. "Culture: persistence and evolution," Journal of Economic Growth, Springer, vol. 24(2), pages 117-154, June.
    32. Martin Koudstaal & Randolph Sloof & Mirjam van Praag, 2016. "Risk, Uncertainty, and Entrepreneurship: Evidence from a Lab-in-the-Field Experiment," Management Science, INFORMS, vol. 62(10), pages 2897-2915, October.
    33. Alessandra Fogli & Raquel Fernandez, 2009. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 146-177, January.
    34. Anastasia Litina, 2016. "Natural land productivity, cooperation and comparative development," Journal of Economic Growth, Springer, vol. 21(4), pages 351-408, December.
    35. Quamrul Ashraf & Oded Galor, 2013. "The 'Out of Africa' Hypothesis, Human Genetic Diversity, and Comparative Economic Development," American Economic Review, American Economic Association, vol. 103(1), pages 1-46, February.
    36. Thomas Dohmen & Armin Falk & Bart H. H. Golsteyn & David Huffman & Uwe Sunde, 2017. "Risk Attitudes Across The Life Course," Economic Journal, Royal Economic Society, vol. 127(605), pages 95-116, October.
    37. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2006. "Does Culture Affect Economic Outcomes?," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 23-48, Spring.
    38. Alberto Alesina & Paola Giuliano, 2015. "Culture and Institutions," Journal of Economic Literature, American Economic Association, vol. 53(4), pages 898-944, December.
    39. Skriabikova, Olga J. & Dohmen, Thomas & Kriechel, Ben, 2014. "New evidence on the relationship between risk attitudes and self-employment," Labour Economics, Elsevier, vol. 30(C), pages 176-184.
    40. Blanchard, Lloyd & Zhao, Bo & Yinger, John, 2008. "Do lenders discriminate against minority and woman entrepreneurs?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 467-497, March.
    41. Pierre Azoulay & Benjamin F. Jones & J. Daniel Kim & Javier Miranda, 2022. "Immigration and Entrepreneurship in the United States," American Economic Review: Insights, American Economic Association, vol. 4(1), pages 71-88, March.
    42. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
    43. Erzo F. P. Luttmer & Monica Singhal, 2011. "Culture, Context, and the Taste for Redistribution," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 157-179, February.
    44. Armin Falk & Anke Becker & Thomas Dohmen & Benjamin Enke & David B. Huffman & Uwe Sunde, 2017. "Global Evidence on Economic Preferences," NBER Working Papers 23943, National Bureau of Economic Research, Inc.
    45. Marc Oliver Rieger & Mei Wang & Thorsten Hens, 2015. "Risk Preferences Around the World," Management Science, INFORMS, vol. 61(3), pages 637-648, March.
    46. Fairlie, Robert W. & Lofstrom, Magnus, 2013. "Immigration and Entrepreneurship," IZA Discussion Papers 7669, Institute of Labor Economics (IZA).
    47. Armin Falk & Anke Becker & Thomas Dohmen & Benjamin Enke & David Huffman & Uwe Sunde, 2018. "Global Evidence on Economic Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(4), pages 1645-1692.
    48. Unel, Bulent, 2018. "Offshoring and unemployment in a credit-constrained economy," Journal of International Economics, Elsevier, vol. 111(C), pages 21-33.
    49. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Trusting the Stock Market," Journal of Finance, American Finance Association, vol. 63(6), pages 2557-2600, December.
    50. Enrico Spolaore & Romain Wacziarg, 2018. "Ancestry and development: New evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 33(5), pages 748-762, August.
    51. Alberto Alesina & Paola Giuliano, 2011. "Family Ties And Political Participation," Journal of the European Economic Association, European Economic Association, vol. 9(5), pages 817-839, October.
    52. James B. Ang, 2019. "Agricultural legacy and individualistic culture," Journal of Economic Growth, Springer, vol. 24(4), pages 397-425, December.
    53. Marco Cagetti & Mariacristina De Nardi, 2006. "Entrepreneurship, Frictions, and Wealth," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 835-870, October.
    54. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
    55. David Figlio & Paola Giuliano & Umut Özek & Paola Sapienza, 2019. "Long-Term Orientation and Educational Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 272-309, November.
    56. Eren, Ozkan & Onda, Masayuki & Unel, Bulent, 2019. "Effects of FDI on entrepreneurship: Evidence from Right-to-Work and non-Right-to-Work states," Labour Economics, Elsevier, vol. 58(C), pages 98-109.
    57. Elizabeth Asiedu & James A. Freeman & Akwasi Nti-Addae, 2012. "Access to Credit by Small Businesses: How Relevant Are Race, Ethnicity, and Gender?," American Economic Review, American Economic Association, vol. 102(3), pages 532-537, May.
    58. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-748, August.
    59. Ekelund, Jesper & Johansson, Edvard & Jarvelin, Marjo-Riitta & Lichtermann, Dirk, 2005. "Self-employment and risk aversion--evidence from psychological test data," Labour Economics, Elsevier, vol. 12(5), pages 649-659, October.
    60. Hakan J. Holm & Sonja Opper & Victor Nee, 2013. "Entrepreneurs Under Uncertainty: An Economic Experiment in China," Management Science, INFORMS, vol. 59(7), pages 1671-1687, July.
    61. Bockstette, Valerie & Chanda, Areendam & Putterman, Louis, 2002. "States and Markets: The Advantage of an Early Start," Journal of Economic Growth, Springer, vol. 7(4), pages 347-369, December.
    62. Cullen, Julie Berry & Gordon, Roger H., 2007. "Taxes and entrepreneurial risk-taking: Theory and evidence for the U.S," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1479-1505, August.
    63. Ranoua Bouchouicha & Ferdinand M. Vieider, 2019. "Growth, entrepreneurship, and risk-tolerance: a risk-income paradox," Journal of Economic Growth, Springer, vol. 24(3), pages 257-282, September.
    64. Ferdinand M. Vieider & Mathieu Lefebvre & Ranoua Bouchouicha & Thorsten Chmura & Rustamdjan Hakimov & Michal Krawczyk & Peter Martinsson, 2015. "Common Components Of Risk And Uncertainty Attitudes Across Contexts And Domains: Evidence From 30 Countries," Journal of the European Economic Association, European Economic Association, vol. 13(3), pages 421-452, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Victor Gay, 2023. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility. A Verification and Reproduction of Fernández and Fogli (2009)," Post-Print hal-04194417, HAL.
    2. Churchill, Sefa Awaworyi & Chang, Simon & Smyth, Russell & Trinh, Trong-Anh, 2024. "The Long Run Gender Origins of Entrepreneurship: Evidence from Australia's Convict History," IZA Discussion Papers 17170, Institute of Labor Economics (IZA).
    3. Aart Kraay & Roy Weide, 2022. "Measuring intragenerational mobility using aggregate data," Journal of Economic Growth, Springer, vol. 27(2), pages 273-314, June.
    4. Chan Yang & Xiaogang He & Xiaoyan Wang & Jinjun Nie, 2022. "The Influence of Family Social Status on Farmer Entrepreneurship: Empirical Analysis Based on Thousand Villages Survey in China," Sustainability, MDPI, vol. 14(14), pages 1-27, July.
    5. Truc Thanh Tran & Nam Khanh Pham, 2024. "Risk Preferences and Entrepreneurial Decision-Making: Evidence from Experimental Methods in Vietnam," Sustainability, MDPI, vol. 16(11), pages 1-16, May.
    6. Tong Wang & Jiaxuan Liu & Hongyu Zhu & Yuansheng Jiang, 2024. "The Impact of Risk Aversion and Migrant Work Experience on Farmers’ Entrepreneurship: Evidence from China," Agriculture, MDPI, vol. 14(2), pages 1-20, January.
    7. Jonsson, Sara & Ouyang, Qinglin, 2023. "Effects of cultural origin on entrepreneurship," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 308-319.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bouchouicha, Ranoua & L’Haridon, Olivier & Vieider, Ferdinand M., 2024. "Law and economic behaviour," Journal of Comparative Economics, Elsevier, vol. 52(1), pages 253-270.
    2. Sutanuka Roy & Sudhir Gupta & Rabee Tourky, 2023. "The Impact of Long–Term Orientation Traits on Pandemic Fatigue Behavior: Evidence from the Columbian Exchange," Journal of Economic Growth, Springer, vol. 28(3), pages 397-438, September.
    3. Sari Pekkala Kerr & William R. Kerr & Tina Xu, 2017. "Personality Traits of Entrepreneurs: A Review of Recent Literature," NBER Working Papers 24097, National Bureau of Economic Research, Inc.
    4. Unel, Bulent & Upton, Gregory B., 2023. "Oil & gas induced economic fluctuations and self-employment," Labour Economics, Elsevier, vol. 82(C).
    5. Francesco Campo & Luca Nunziata & Lorenzo Rocco, 2024. "Business is tense: new evidence on how language affects economic activity," Journal of Economic Growth, Springer, vol. 29(1), pages 121-149, March.
    6. Scott L. Fulford & Ivan Petkov & Fabio Schiantarelli, 2020. "Does it matter where you came from? Ancestry composition and economic performance of US counties, 1850–2010," Journal of Economic Growth, Springer, vol. 25(3), pages 341-380, September.
    7. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    8. Mikko Vaaramo & Leena Ala-Mursula & Jouko Miettunen & Marko Korhonen, 2023. "Economic preferences and temperament traits among business leaders and paid employees," Small Business Economics, Springer, vol. 60(3), pages 1197-1217, March.
    9. Kleinhempel, Johannes & Klasing, Mariko & Beugelsdijk, Sjoerd, 2022. "Cultural Roots of Entrepreneurship," MPRA Paper 115942, University Library of Munich, Germany.
    10. Armin Falk & Anke Becker & Thomas Dohmen & Benjamin Enke & David Huffman & Uwe Sunde, 2018. "Global Evidence on Economic Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(4), pages 1645-1692.
    11. Fredriksson, Per G. & Mohanty, Aatishya, 2021. "Sunlight and Culture," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 757-782.
    12. Kerr, Sari Pekkala & Kerr, William R. & Nanda, Ramana, 2022. "House prices, home equity and entrepreneurship: Evidence from U.S. census micro data," Journal of Monetary Economics, Elsevier, vol. 130(C), pages 103-119.
    13. Pekkala Kerr, Sari & Kerr, William, 2020. "Immigrant entrepreneurship in America: Evidence from the survey of business owners 2007 & 2012," Research Policy, Elsevier, vol. 49(3).
    14. Frank M. Fossen & Johannes König & Carsten Schröder, 2024. "Risk preference and entrepreneurial investment at the top of the wealth distribution," Empirical Economics, Springer, vol. 66(2), pages 735-761, February.
    15. Johannes C. Buggle, 2020. "Growing collectivism: irrigation, group conformity and technological divergence," Journal of Economic Growth, Springer, vol. 25(2), pages 147-193, June.
    16. Ge, Suqin & He, Quqiong & Sarangi, Sudipta, 2024. "Reaping what you sow: Historical rice farming and contemporary cooperative behavior in China," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 581-613.
    17. Ross Levine & Yona Rubinstein, 2018. "Selection into Entrepreneurship and Self-Employment," NBER Working Papers 25350, National Bureau of Economic Research, Inc.
    18. Opromolla, Luca David & Dell’Era, Michele & Santos-Pinto, Luis, 2018. "A General Equilibrium Theory of Occupational Choice under Optimistic Beliefs about Entrepreneurial Ability," CEPR Discussion Papers 13225, C.E.P.R. Discussion Papers.
    19. Aymeric Bellon & J. Anthony Cookson & Erik P. Gilje & Rawley Z. Heimer, 2020. "Personal Wealth and Self-Employment," NBER Working Papers 27452, National Bureau of Economic Research, Inc.
    20. Hillel Rapoport & Sulin Sardoschau & Arthur Silve, 2020. "Migration and Cultural Change," Working Papers 2020-10, CEPII research center.

    More about this item

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • Z10 - Other Special Topics - - Cultural Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lsu:lsuwpp:2019-07. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/delsuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.