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Puey Ungphakorn
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Call for Papers: PIER Research Workshop 2025
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Discussion Paperdp
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17 October 2017
20171508198400000
No. 071

Overoptimistic Entrepreneurs: Predicting Wellbeing Consequences of Self-Employment

Abstract

The formation of expectations is a fundamental part of the process when people decide about engaging in an entrepreneurial venture. We evaluate the accuracy of newly self-employed people's predictions of their overall future wellbeing. Based on individual panel data for Germany, we find that they are overly optimistic when we compare their predicted life satisfaction with their actual life satisfaction five years later on. This overoptimism also holds for those entrepreneurs who successfully remain in business for at least five years. A possible reason might be that they underestimate the heavy workload reflected in higher working hours than desired and the drop in leisure satisfaction.

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JEL: I31L26
Tags: adaptationoveroptimismlife satisfactionprojection biaswellbeingselfemployed
The views expressed in this workshop do not necessarily reflect the views of the Puey Ungphakorn Institute for Economic Research or the Bank of Thailand.
Reto Odermatt
Reto Odermatt
Nattavudh Powdthavee
Nattavudh Powdthavee
Nanyang Technological University
Alois Stutzer
Alois Stutzer

Puey Ungphakorn Institute for Economic Research

273 Samsen Rd, Phra Nakhon, Bangkok 10200

Phone: 0-2283-6066

Email: pier@bot.or.th

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