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Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy




One can be independent, or one can be subject to decisions made by others. This paper argues that this difference, embodied in the institutional distinction between the decision-making procedures 'market' and 'hierarchy', affects individual wellbeing beyond outcomes. Taking self-employment as an important case of independence, it is shown that the self-employed derive higher satisfaction from work than those employed in organizations, irrespective of income gained or hours worked. This is evidence for procedural utility: people value not only outcomes, but also the processes leading to outcomes. Copyright (c) The London School of Economics and Political Science 2007.

Suggested Citation

  • Matthias Benz & Bruno S. Frey, 2008. "Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy," Economica, London School of Economics and Political Science, vol. 75(298), pages 362-383, May.
  • Handle: RePEc:bla:econom:v:75:y:2008:i:298:p:362-383

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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure


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