Self-employment and psychometric measure of risk aversion: a replication and extension

ABSTRACT

We examine whether the psychometric feature, called fear of uncertainty, predicts self-employment choice by individuals. Using the most recent Northern Finland birth cohort 1966 (NFBC1966) data from 2012, we find no clear evidence of such an effect. We also explore whether this effect might have changed due to increase of females in labour market, endogenous adaptation in risk preferences or because of the self-employment experience itself affects risk preferences. These effects are not significant, either.

KEYWORDS:

• Self-employment
• psychometric data
• risk aversion
• logit regression

JEL CLASSIFICATION:

• A12
• D81

Acknowledgments

We thank the late professor Paula Rantakallio (launch of NFBC1966), the participants in the 46-year study and the NFBC project centre. Mikko Vaaramo thanks Yrjö Jahnsson Foundation and Oulu University Graduate School (UniOGS) for their generous support.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Since we have NFBC1966 data only for individuals who participated study in 2012, we unfortunately miss some individuals that are in Ekelund et al. (2005).

² In the Ekelund et al. original study, the parameter value was −.086, and it was also significant at a 5% level of significance.

³ This data are based on the timeline matrix developed by Ellen Ek to the 2012 survey. It is important to mention that we are able to use 1997 data only for those individuals who answered in both follow-up studies, 1997 and 2012.

Additional information

Funding

NFBC1966 received financial support from University of Oulu [Grant no. 24000692]; Oulu University Hospital [Grant no. 24301140]; ERDF European Regional Development [Fund Grant no. 539/2010 A31592].