9. Insights into the Psychological Profiles of Entrepreneurs

Entrepreneurs derive lower risk-adjusted returns than non-entrepreneurs, but are compensated through non-pecuniary benefits. This chapter reports on findings from survey evidence. The main findings are as follows: A key non-pecuniary benefit to entrepreneurs is achieving greater control over their working environment. Doing so leads entrepreneurs to report achieving higher affect and well-being than non-entrepreneurs. Entrepreneurs report that they are more skilled socially than non-entrepreneurs. This might provide a partial explanation for why entrepreneurs have a higher marriage rate and larger families than non-entrepreneurs. Entrepreneurs exhibit greater dispositional optimism than non-entrepreneurs. However, in the study sample, the difference is not statistically significant. In terms of preference for lottery-like outcomes, entrepreneurs find prospects offering high returns with low probability attractive, but regard control of their environment as more important than the preference for positive skewness.