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Slipping the surly bonds: The value of autonomy in self-employment


  • Croson, David C.
  • Minniti, Maria


This paper models the tradeoff between increased autonomy from self-employment and the generally higher income that traditional employment offers. While the demand for autonomy is a purely psychological construct, the economic tradeoffs involved in its achievement are eminently amenable to quantification and analytical modeling characteristic of economic analysis. We use this setup to offer a multifactor utility formulation formalizing the notion of an explicit, autonomy-based preference for self-employment. We propose such a formulation as a theoretically-defensible alternative to the classic (and also psychologically-based) overconfidence hypothesis in explaining why self-employment is chosen despite evidence that newly self-employed individuals earn less than comparable individuals who continue their current employment. Our model, founded on utility maximization by a rational individual, demonstrates not only that newly self-employed individuals are willing to accept lower earnings outcomes in exchange for psychic benefits from self-employment, but also that the structure of their optimal launch-timing decision guarantees that they will quit at a time such that their income will (at least initially) be reduced. We conclude with implications for the design of empirical instruments to quantify the relative importance of autonomy and income.

Suggested Citation

  • Croson, David C. & Minniti, Maria, 2012. "Slipping the surly bonds: The value of autonomy in self-employment," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 355-365.
  • Handle: RePEc:eee:joepsy:v:33:y:2012:i:2:p:355-365 DOI: 10.1016/j.joep.2011.05.001

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    References listed on IDEAS

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    Cited by:

    1. Michael Wyrwich, 2015. "Entrepreneurship and the intergenerational transmission of values," Small Business Economics, Springer, vol. 45(1), pages 191-213, June.
    2. Lechmann, Daniel S. J., 2013. "Can working conditions explain the return-to-entrepreneurship puzzle?," Discussion Papers 86, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    3. 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.
    4. Cueto, Begona & Pruneda, Gabriel, 2015. "Job Satisfaction of Wage and Self-Employed workers. Do preferences make a difference?," MPRA Paper 65432, University Library of Munich, Germany.
    5. Teemu Kautonen & Simon Down & Maria Minniti, 2014. "Ageing and entrepreneurial preferences," Small Business Economics, Springer, vol. 42(3), pages 579-594, March.
    6. Viktor Slavtchev & Michael Wyrwich, 2017. "TV and Entrepreneurship," Jena Economic Research Papers 2017-007, Friedrich-Schiller-University Jena.
    7. Charalampos Botsaris & Vasiliki Vamvaka, 2016. "Attitude Toward Entrepreneurship: Structure, Prediction from Behavioral Beliefs, and Relation to Entrepreneurial Intention," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(2), pages 433-460, June.
    8. Jörn H. Block & Andreas Landgraf, 2016. "Transition from part-time entrepreneurship to full-time entrepreneurship: the role of financial and non-financial motives," International Entrepreneurship and Management Journal, Springer, vol. 12(1), pages 259-282, March.
    9. Aguilar, Alexandra Cortés & García Muñoz, Teresa M. & Moro-Egido, Ana I., 2013. "Heterogeneous self-employment and satisfaction in Latin America," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 44-61.
    10. Michael Wyrwich, 2013. "In the name of my parents: Entrepreneurship and the intergenerational transmission of values," Jena Economic Research Papers 2013-031, Friedrich-Schiller-University Jena.
    11. Pamela Lenton, 2017. "Being your own boss: the many faces of self-employment," Working Papers 2017003, The University of Sheffield, Department of Economics.
    12. Kautonen, Teemu & Kibler, Ewald & Minniti, Maria, 2017. "Late-career entrepreneurship, income and quality of life," Journal of Business Venturing, Elsevier, vol. 32(3), pages 318-333.
    13. Begoña Cueto & Gabriel Pruneda, 2017. "Job Satisfaction of Wage and Self-Employed Workers. Do Job Preferences Make a Difference?," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 12(1), pages 103-123, March.
    14. Cortés Aguilar Alexandra & Teresa Garcia-Muñoz & Ana I. Moro Egido, 2013. "Heterogeneous Self-employment and Subjective Well-Being. Evidence from Latin America," ThE Papers 13/05, Department of Economic Theory and Economic History of the University of Granada..

    More about this item


    Entrepreneurship; Autonomy; Utility; Mathematical modeling; Value; Freedom; Timing; Tradeoff; Self-employment; Quitting;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance


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